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College student receiving a large sum of unemployment and form 8615

Hank
Level 1

I have a client that has a son going to college.  He only received a small W-2 for the 2020 tax year ($2,010) and unemployment of $18,976 (under PUA).  His earned income did not exceed 1/2 of his support and his unemployment appears to be considered unearned income for purposes of form 8615.  Am I correct that even if the parents were not to claim him as a dependent he would still be required to complete form 8615 and pay tax at the parents tax rate?  The parents feel that the son does not provide more than 1/2 of his own total support as he lives with them, they pay part of his tuition, etc. so they are planning to claim him as a dependent.  This is despite the large amount of unemployment that he received.  If they do meet the definition to claim him as a dependent he would not qualify for any recovery rebates.  I feel that I am missing something in this case so any help would be greatly appreciated.

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3 Replies 3
sjrcpa
Level 15

I think you are correct on everything.


ex-AllStar
Hank
Level 1

Thanks.

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BobKamman
Level 14

@Hank "If they do meet the definition to claim him as a dependent he would not qualify for any recovery rebates."

That's true for EIP#1 and EIP#2.  For the next one, all I know is what I read in the newspaper.

"Adult dependents are eligible for stimulus payments under the Democrats’ current plan, according to multiple people with knowledge of the matter."

https://www.washingtonpost.com/business/2021/02/03/biden-stimulus-checks-what-you-need-to-know/