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kiddie tax & tax reform

mj46
Level 3

Under Tax Reform, Children under 18 with unearned income over $2,100, file Form 8615 but are no longer taxed at their parents' tax rate.  They will be taxed at fiduciary rates.  Does this also apply to dependents 18 & older (students) or does the old rule still apply?  With unemployment being unearned income for Form 8615, I have a student who's tax on the unemployment is almost as much as the income from the unemployment.  This makes no sense to me.  Is there some relief there, maybe COVID-19 relief?

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TaxGuyBill
Level 15

@mj46 wrote:

Under Tax Reform, Children under 18 with unearned income over $2,100, file Form 8615 but are no longer taxed at their parents' tax rate.  They will be taxed at fiduciary rates. 

Does this also apply to dependents 18 & older (students) or does the old rule still apply? 

With unemployment being unearned income for Form 8615, I have a student who's tax on the unemployment is almost as much as the income from the unemployment.


 

No, that was undone.  It is now back to the parents' rate under the old rules.

Yes, Kiddie Tax also applies to full time students under age 24 (unless the provided over 1/2 of their own support with earned income).

What program are you using?  There is a ProSeries error that may be miscalculating things.  You need to open up one of the Kiddie-Tax Schedule D worksheets (even if there is no Schedule D, and you just need to open it, not do anything else) to make it do the correct calculation.

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TaxGuyBill
Level 15

@mj46 wrote:

Under Tax Reform, Children under 18 with unearned income over $2,100, file Form 8615 but are no longer taxed at their parents' tax rate.  They will be taxed at fiduciary rates. 

Does this also apply to dependents 18 & older (students) or does the old rule still apply? 

With unemployment being unearned income for Form 8615, I have a student who's tax on the unemployment is almost as much as the income from the unemployment.


 

No, that was undone.  It is now back to the parents' rate under the old rules.

Yes, Kiddie Tax also applies to full time students under age 24 (unless the provided over 1/2 of their own support with earned income).

What program are you using?  There is a ProSeries error that may be miscalculating things.  You need to open up one of the Kiddie-Tax Schedule D worksheets (even if there is no Schedule D, and you just need to open it, not do anything else) to make it do the correct calculation.

TaxGuyBill
Level 15