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Lev
Lev, Tax Advisor
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Experience:  Taxes, Immigration, Labor Relations
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NEED HELP WITH KIDDIE TAX FOR 2009

Customer Question

Brother has 97,000 agi for 2009. Has daughter, full time student, turned 20 in 2009. She had 4400 salary, $97 savings interest, and $3400 interest from county accrued on a auto vehicle accident she had when she was underage. Brother is able to claim her for 2009. What do I do about the kiddie tax? Which forms do I send w/ the tax returns? This is the 2009 returns I am doing for both. I am a nervous wreck because I have never done the kiddie tax before;-)
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

LEV :

Hi and welcome to Just Answer!
The child is a subject of kiddie tax on unearned income that is above the limit ($1900 in 2010 and 2009).
There is no kiddie tax on wages.

Use Form 8615 to compute the tax on your child´s income - http://www.irs.gov/pub/irs-pdf/f8615.pdf .
This is the form for 2009 - http://www.irs.gov/pub/irs-prior/f8615--2009.pdf
Let me know if you need any help.

Customer :

Does her income, just the interest go on the parents' return, and then her wages on her return? Does ALL her interest go on the parents' return? Is there a form for the parents also?

LEV :

There is no kiddie tax on wages. Wages are taxed at her regular tax rate.
Only unearned income is subject of kiddie tax.
There are no additional forms for parents.

Customer :

Ok, do her return, not claiming herself, with only her wages. Put her interest (both) on her parents return and attach the 8615 to the parents' return?

LEV :

Your brother's daughter should file her own tax return and attach the form 8615.

Customer :

With just her wages, correct?

LEV :
Your brother's daughter should file her own tax return and report all her income - including wages and unearned income that she had - such as interest income which you mentioned above.
Customer :

Do her 1040, w/ her wages and her interest (both) then the 8615 will transfer her interest to her parents' return so that she is single/0 with only her fwt back as a refund?

LEV :

You will file your brother daughter tax return as you do that for yourself - reporting all her income.
You do not "transfer her interest to her parents' return" - all her income should be reported on her tax return.
You need to mark on her tax return that she is a dependent.
You should use the form 8615 to calculate her tax liability and will attach that form to HER tax return.

Customer :

So therefore her tax will NOT be $9000 as it now stands.

Customer :

My brother has a Sch F with a loss, the 8615 says something about that.

LEV :

To calculate her tax liability - you need to use the form 8615. Her parent's tax rate should be used. Without filing that form I may not say what her actual tax liability will be.
I am not clear how you came up with $9000 tax liability.
Consider her income - $4400 salary, $97 savings interest, and $3400 interest - $9000 in tax liability seems incorrect.

Customer :

That is what pops up as her owing on my program. You are really helping though.

LEV :

Most likely - you entered incorrect information about her income.
It is very unlikely that her tax liability is more than her total income.

Customer :

Do I still use the 8615 even though my brother had a sch f, with a loss?

LEV :

Yes - you need to use the form 8615 to calculate her taxes based on her parent's tax rate because she is a child fro kiddie tax purposes.

Customer :

ok, thanks I will try this tonight.

LEV :

You are welcome. If you need help - please post all lines and amounts from the form 8615 - I will verify your calculations.

Customer :

OH thank you.

Customer :

Ok:

Customer :

1040, age 20 07/2009, full time university student.

Customer :

line 7 wages: 4370

LEV :

That is correct.
Line 1 - Single - should be checked.
Line 6a should not be checked because she is a dependent.
Line 6d should be zero
Line 8a - report taxable interest.

Expert:  Anne replied 3 years ago.
The child should file a form 1040EZ, report her wages and $97 +3400 in interest income. Since she is under age 24 and a full time student, she should mark herself as being claimed as a dependent by her parents. Form 8615 should never have been an issue in this case since the taxpayer was over age 18.
Expert:  Lev replied 3 years ago.

Appreciate Anne for her input. Unfortunately - Form 8615 should never have been an issue in this case since the taxpayer was over age 18 - for tax years before 2008.

Please see IRS pub 929 page 15 - http://www.irs.gov/pub/irs-pdf/p929.pdf

When Form 8615 must be filed. Form 8615 must be filed for a child if all of the following statements are true.

1.The child's investment income was more than $1,900.

2.The child is required to file a return for 2010.

3.The child either:

a.Was under age 18 at the end of the year,

b.Was age 18 at the end of the year and did not have earned income that was more than half of his or her support, or

c.Was a full-time student over age 18 and under age 24 at the end of the year and did not have earned income that was more than half of his or her support.

4.At least one of the child's parents was alive at the end of 2010.

5.The child does not file a joint return for 2010.

Since the child was a full-time student whose earned income wasn´t more than half of her support - the form 8615 is required.

The tax law was changed according to the Small Business and Work Opportunity Tax Act of 2007.

Customer: replied 3 years ago.
Yes, I went back and see where I HAVE to do the 8615. I will report the lines soon.
Expert:  Lev replied 3 years ago.

If you have already received a satisfactory answer to your question, click the Accept button above. Experts are credited for each accepted answer they provide.

 

If you need help - please post all lines and amounts from the form 8615 - I will verify your calculations.

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