Kiddie Tax & Unemployment Craziness

Forum|Forum|5 years ago
February 14, 2021
8 replies
53 views

I've already seeing many insane looking tax returns for teenagers who somehow received tens of thousands in unemployment and are in the 35% and even 37% tax bracket!!!!!! One client dropped off her daughter's w-2 for less than $1,500 and a 1099-g for over $20,000 (!!!!!) with a note asking is her daughter even needed to file!!!!! She owes $5,000+!!!!!!!

ProSeries Professional

This topic has been closed for replies.

Best answer by Frustrated-in-IL

I posted this in another thread. The program is computing the kiddie tax wrong. After you enter all your information, make sure you open the 8615 Schedule D worksheet. You don't have to enter anything, just open it. Upon opening it, the tax computed will change to the correct tax.

I have two kids so far with just unemployment and small W2 so no need to have the Schedule D worksheet. But because of a similar issue the program had last year, I recognized the problem. My point is we shouldn't have to recognize a problem like this. We all pay big bucks for this program and it should work. Period.

Accountant-Man

Level 13

Yeah, laws suck.

But the daughter has over $20,000 of unemployment income she probably didn't deserve, so she has lots of money to pay the frigging tax!

Cry me a river. Pay the tax.

** I am "Elevating with Intention!"

PATAX

Level 12

Why did she not have the income tax withheld from the unemployment compensation? You are right accountant man.

FTAXAuthor

Level 5

Well, for one thing, NJ allows no more than 10% withholdings on unemployment and NONE on the extra $600 from the feds. So, even when the taxpayer requests withholdings, it is never an adequate amount.

dkh

Level 15

This tax season is like a walk thru the Fun House at the local fair......you never know what is waiting around the next corner.

F

Frustrated-in-ILAnswer

Level 8

I posted this in another thread. The program is computing the kiddie tax wrong. After you enter all your information, make sure you open the 8615 Schedule D worksheet. You don't have to enter anything, just open it. Upon opening it, the tax computed will change to the correct tax.

I have two kids so far with just unemployment and small W2 so no need to have the Schedule D worksheet. But because of a similar issue the program had last year, I recognized the problem. My point is we shouldn't have to recognize a problem like this. We all pay big bucks for this program and it should work. Period.

FTAXAuthor

Level 5

Yes, thanks for pointing this out. Unless you "zoom click" to the schedule D, the software does not cap the child's marginal rate to the parents and the program will show 'no errors', even though the calculation is wrong.

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