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Kiddie Tax and Unemployment

kendrick03
Level 1

I have a client who is 14 and has unemployment income of 15K due to COVID and not being able to have a summer job. He did have taxes taken out and wants to file. His parents did not keep any of his money as the gave it to him. Is there a way to not apply the kiddie tax to his return? Applying the kiddie tax makes him owe which he has paid taxes on his income. I understand the theory behind kiddie tax but all of the income belongs to the teenager. 

My second question is what if he doesn't file? His return before kiddie tax applied would be 14.00

I hope I explained this correctly. 

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3 Replies 3
sjrcpa
Level 15

Kiddie tax applies. If he doesn't file, IRS computers match the 1099 for unemployment and send him a CP2000 notice.


ex-AllStar
IRonMaN
Level 15

$15K of unemployment for a 14 year old kid?  Another example of how the system worked so well. 

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Accountant-Man
Level 11

<<His return before kiddie tax applied would be 14.00>> No, his REFUND might be $14.00, but his RETURN is a 1040.

He doesn't get to choose whether or not he WANTS to file. He files because he should file.

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