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Discussion Forum Index --> Advanced Tax Questions --> Kiddie Tax and dependency issue
Discussion Forum Index --> Tax Questions --> Kiddie Tax and dependency issue
Barbara (talk|edits) said:
| 21 November 2007
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| My client's son, age 18, has a large investment account which, along with distributions from a 529 plan, are sufficient to support him while he is in college. He has some earned income, but it is not more than 50% of his support. His parents were not planning on claiming him as a dependent in 2008. Will he still be subject to the kiddie tax?
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Riley2 (talk|edits) said:
| 21 November 2007
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| Since his earned income in 2008 will be less than or equal to 50% of his support he will be subject to the kiddie tax if he is a full time student.
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GregC8579 (talk|edits) said:
| 21 November 2007
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| Sorry...just pouring my third drink now, holiday weekend right?
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RayR (talk|edits) said:
| 21 November 2007
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| By saying that the parents are not claiming him in 2008 I am assuming that you mean for tax year 2007. For tax year 2007 generally the kiddie tax applies if the child has not reached 18 years of age by the close of the tax year, the childs unearned income exceeds $1,700 and the child does not file a joint return. For tax year 2008 the age increases to age 19. I would recommend that you look up the kiddie tax rules and see how your situation fits.
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Barbara (talk|edits) said:
| 22 November 2007
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| No, I was referring to the year 2008. He is definitely both a dependent and subject to kiddie tax on his investment income in 2007. My question refers to next year, when he will be in college all year and will be paying all his own expenses. I thought he could avoid the kiddie tax in 2008 since his parents are not supporting him. I was also under the impression that having earned income greater than one-half of his support was necessary to avoid kiddie tax only if his parents were providing support. However, further research has me confused; I can't tell whether the requirement for earned income in excess of one-half support is a requirement under ALL circumstances, even if he pays all his own support. I was hoping that someone might have more specifics on this issue than I have been able to uncover.
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Riley2 (talk|edits) said:
| 22 November 2007
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| Since the earned income does not exceed one-half of his support, the kiddie tax rules will apply. See Internal Revenue Code ยง 1(g)(2), effective for 2008. If you are looking for an exception to the general rule, you won't find one in the Internal Revenue Code.
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Bengoshi (talk|edits) said:
| 22 November 2007
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| Barbara, in what year is child turning 18 years of age? Has he already turned 18 in 2007? (Or is he turning 18 in 2008?)
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Riley2 (talk|edits) said:
| 24 November 2007
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| I think Barbara is saying that the child will be under the age of 18 in 2007, but will be 18 by the end of 2008.
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Whataboutbob (talk|edits) said:
| 25 November 2007
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| ok so do i have to tell my kiddie what my income is. he is as others are sole supporting and what if we are estranged??
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Whataboutbob (talk|edits) said:
| 25 November 2007
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| or what if the kiddie wont tell me what their income etc is and we are estranged?
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Skhyatt (talk|edits) said:
| 25 November 2007
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| Barbara, see "2007 Small Business Act". The act, among other things, expands the "kiddie tax" to apply to a child who turns 18 or a full time student age 19-23 before the end of the year. Read through that act, which went into effect for tax years beginning after 5/25/07, and you will see the other changes as well.
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Skhyatt (talk|edits) said:
| 25 November 2007
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| Whataboutbob, see pub 929. It might have some helpful info on your questions.
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