TaxGuyBill
Level 15

@Nick G wrote:

1. Does unemployment income count when performing the support test of a qualifying child?

Being that my client is under 24 and a full-time student, while also living at home, he meets all other dependent tests beside the support test (if unemployment income is factored in as useable for support).

2. Would Form 8615 be required if he supports himself using UNEARNED income?

The way the question is phrased on the 8615 leads me to believe that only earned income is used in determining support on this form. This would mean that the $3,800 of W2 wages would be the only income considered in determining support, making him fill out the form as he reasonably could not support himself on only $3,800 worth of income.

3. Can my client be both independent and required to fill out form 8615?

In a normal year a student in this case would not qualify for unemployment comp based on the scenario thus eliminating the need for the kiddie tax form entirely. By not qualifying as a dependent, my client would also be entitled to receive the recovery rebate credit (stimulus) and any future stimulus payments that get passed.


1) "Income" does not count for the Support Test.  Money SPENT counts for the support test.  That could be from anywhere, including earned income, unearned income, gifts or savings.

2) Yes.  The Kiddie Tax applies unless the child provides over 1/2 of their support with EARNED income.  As you said, that did not happen with $3800 of income, so the Kiddie Tax applies.

3)  Yes.  A non-dependent may still be required to pay Kiddie Tax.  The Kiddie Tax is not based on being a dependent, but on the rules that you have pointed out.

 

 

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