rbynaker
Level 13

@jshoag27 wrote:

Kids have no earned income.  Mom has no earned income. Grandparents are supporting all 3: mom and 2 kids and themselves.  Filed Grandparents return just on the 2 grandparents alone in 2019 as normal with no dependent grand kids this time.

Form 8615 gets massively complicated due to the kids age of 17 and 18 and as well as the parent (mom) had no reportable income.

Where did the kids' money go?

If you're correct that "Grandparents are supporting all 3" then shouldn't the grandparents claim the kids as dependents and get ODC?

@TAXOH is awesome at this stuff, I always have to fumble around in flowcharts so I'm probably missing something.  I thought the test was whether or not a QC provides more than half of their own support.

So then if the kids are dependents of someone else (grandparents), they cannot claim themselves and are stuck with the crappy standard deduction rules, right?

For kiddie tax, I don't remember how the old rules worked but I think grandparents are out of the picture.  So kids are taxed at Mom's rates and with Mom having no income, they're just taxed at regular rates (but since there are two of them they might share the same set of tax brackets).

Since I'm a one-person shop I have to review my own work.  So I set an expectation of what the final return will look like and then compare it to what the software comes up with.  My expectation would be each kid's gross income minus the limited standard deduction and taxed at the Single rates with the thresholds cut in half (so basically at the MFS rates.)  But I don't see a way around crunching all of the kiddie tax numbers (which likely includes creating a mock return for Mom if she didn't file one) and plugging everything into the various 8615 worksheets (AFAIK they haven't "fixed" the 8615 yet to go back to the old rules but I think there are worksheets you can use in the instructions.)

Rick