Filing Status

[hananb21]

This is Han,

This single mother's son is 21 in 2019. Full time college student, who lives at home, makes about $8k working part-time, that makes him her dependent, she files HOH,  I get that...  The problem is, both him and his mother inherited $70k each from the boy's grand mother's death in 2019, so I filed him separately because of the high income. I also prepared her as single too, not e-filed yet, but now I'm thinking she really should be HOH. The boy's inheritance not withstanding, which he stashed away in the bank,  she still provides more than half the household's upkeep.

Am I correct on that or not? 

[dd4vols · Accepted solution]

In what form was the $70k that the son inherited from his grandmother.  Just getting cash, or CDs, or Life insurance proceeds does not change his taxable income of 'about $8k. Of course, it certainly changes (more than likely), the ability of the parent to claim him as a dependent.  It does not, however, change her ability to  be a HOH filer.   

[sjrcpa]

Since he stashed his $70K in the bank it was not used for his support or to maintain the household.

[Accountant-Man]

Since when is inheritance taxable income?

[BobKamman]

Maybe an IRA distribution that could have been rolled over but wasn't. 

[hananb21]

The grand mother had a Deferred Comp plan with her job, which mother and son inherited, and was paid out to them in 2019 by checks.

[rbynaker]

Sounds like it's just going to come down to "Did the student provide more than half of his own support?"

Ironically, when you answer "no" to this question, not only do you get a worse tax result (kiddie tax), you are also subject to the extra due diligence requirements and an 8867 filing.

Rick

[TaxGuyBill]

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@rbynaker wrote:

Sounds like it's just going to come down to "Did the student provide more than half of his own support?"

Ironically, when you answer "no" to this question, not only do you get a worse tax result (kiddie tax), you are also subject to the extra due diligence requirements and an 8867 filing.

Rick

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Kiddie Tax may apply even if the answer is "yes".  Kiddie Tax applies unless the student provided more than half of his own support with EARNED income.