Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Kiddie Tax based on Secure Act changes allowed Standard Deduction for Dependent?

Highlighted
Level 1

I have been reading on the Secure Act changes regarding Kiddie Tax, that it retroactively repeals the TCJA Kiddie Tax rate change for all children and young adults and reinstates the pre-TCJA Kiddie Tax calculation so that it’s once again based on the parent(s)’ marginal tax rate. I also read that:

In calculating the federal income tax bill for a dependent child (or young adult) who is subject to the Kiddie Tax, the child is allowed to subtract his or her standard deduction amount.

* For 2018, the standard deduction for an unmarried child is the greater of: (1) $1,050 or (2) earned income + $350, not to exceed $12,000.

* For 2019, the standard is the greater of: (1) $1,100 or (2) earned income + $350, not to exceed $12,200.

* For 2020, the standard deduction is the greater of: (1) $1,100 or (2) earned income + $350, not to exceed $12,400.

So it is proper to indicate on the CHILD's return that they are NOT Dependent of someone else, so that the software gives the child the STANDARD DEDUCTION?

0 Cheers
2 Replies 2
Highlighted
Level 12

Huh?  No, there is no change to a dependent's Standard Deduction.

So IF they ARE a dependent, their Standard Deduction is what you showed.  If they are NOT a dependent, their Standard Deduction is $12,200 (2019).

Highlighted
Level 1

Thank you, I understand now, I was reading it as if they are allowed the max of $12,200 but that is not the case.

0 Cheers