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I have a client who is a student and this year did alot of Crypto transactions and ultimately had over $85000 in s/t capital gains. In theory the kiddie tax would come into play but this is sort of his job as well as being a student. He only had $2500 in W-2 wages. can you just not file the kiddie tax and file as single. The gains in theory cover half of his support
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Did he actually pay for his support, not could he/she have? If sitting in his crypto account or reinvested and not spent on support then obviously no. I would be surprised to hear he/she paid for college, housing, food, etc. as per the listing the IRS has for determining support.
I'm really shocked at your $85k. I've had a ton of client crypto this year and hardly anybody made any real money. Curious, what's the kid's major? Finance or Art History?
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If he under age 24 and was considered a full-time student, the Kiddie Tax applies to him.
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He is finance. I have a 113 page schedule D from Crypto transactions. he trades every day multiple times a day and i am thinking it is really his "job" he did not pay for all his tuition, but some and used some to purchase a moped/scooter to get around campus. I just think it is crazy that kiddie tax should apply
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i previously posted I had one over 18,000 pages with 270,000+ transactions. Far exceeded IRS attachment file size limit so had to borrow a friends software to create the pdf file for attachment. Thought about mailing the 18,000 pages but that would be my entire tax season profit.
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"but this is sort of his job"
But it's not. It's not Earned Income.
"He only had $2500 in W-2 wages."
There's the Job.
Don't yell at us; we're volunteers
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I understand your comments. Just trying to see if there is a way to avoid the kiddie tax. Parents are in high tax bracket so it is substantial difference in tax owed.
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Is support relevant for a student under 24? To get out of kiddie tax he needs earned income >50% of his support. We don't have all of the facts but my guess is kiddie tax applies here.
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In addition to learning how to make money; now he learns the tax consequences of making money.
The more I know the more I don’t know.