College Student receiving unemployment

[KathyC44]

College student receiving 15000 in unemployment and when entering parent info for form 8615 their tax is over 6000.  Unbelievable amount of tax for college student!  Have multiple college students faced with this issue.

[sjrcpa]

I find it unbelievable that so many college students got so much unemployment benefits.

What did they do with the money? Why didn't they have tax withheld on it?

I'm having trouble working up sympathy here.

[rbynaker]

40% seems a little high, what tax bracket are the parents in?

Not sure what software you're using but if it's ProSeries, it might be related to an "unexpected behavior" discussed in this thread:

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/kiddie-tax-unemployment...

[dkh]

Until ProSeries has a fix - to get the proper calculations on the F8615 you HAVE to click on the Quickzoom for Schedule D Tax Calculation Worksheet.   No entries are required on the Sched D but it activates something mysteriously      I've had two F8615's  and this worked

if you read the thread that @rbynaker referenced it discusses this quirk

@sjrcpa  I agree with you on no sympathy for the college students with tax on this crazy amount of unemployment.   I cannot understand how they would even qualify

[BobKamman]

That's right.  Blame the kid, don't blame the politicians who wrote the law.  And where does it say he did not have tax withheld?  From what I have seen, the choice is either zero or ten percent -- higher amounts are not an option.  

And how much was your PPP grant?

Give them a year, and Congress may get around to fixing the Kiddie Tax rules so that unemployment is considered earned income.  I would delay filing the return and tell the students to call and email their members of Congress.  There are still a few journalists left who cover good tax stories, also.  

[KathyC44]

All, I did the family link and that worked to lower the tax.  But 2300 tax is still high.  College students were allowed to get unemployment under the Cares Act. Taxes were not withheld in the beginning of collecting even with requests from taxpayer.  Student did have 970 withheld as most of you have discovered that unemployment did not withhold a full 10% as they were grappling with getting money out the door.

Agree with the writer about the need for tax reform.  How about home office deduction for all the at home workers in 2020?

[BobKamman]

@KathyC44 "How about home office deduction for all the at home workers in 2020?"

The at-home workers in my family are saving more in commuting costs than they are out of pocket for any increased expenses.  I know there are those who have had to buy more technology or even move to a larger space.  When there are complaints about sending $1,800 tax-free to people who make $75K a year, I think about those people.  

I'm glad you found a solution here to the software glitch.  Since only 1% of users would show up here with a question about it, I feel sorry for the students whose returns are being prepared by the other 99%.  

[qbteachmt]

"But 2300 tax is still high. College students were allowed to get unemployment under the Cares Act. Taxes were not withheld in the beginning of collecting even with requests from taxpayer."

The supplemental PUA is what typically resulted in high UI; in fact, many employers could not get workers to come back, because they were making more money not working. Many States did not allow withholding on anything other than their "standard" UI.Think of how many adult clients you have that do not handle withholding well and do not make estimated payments. How do you expect those "children" to know?

Have you seen the list? This continues into 2021.

Expanded Unemployment Assistance in 2020

In addition to tremendous increases in the number of workers claiming state UI benefits, millions of workers became newly eligible for unemployment benefits, were eligible for additional weeks of benefits, and received higher benefit payments than they would under longstanding UI programs as a result of the CARES Act. The CARES Act, enacted in March 2020, established three programs targeted at jobless workers:

• Pandemic Extended Unemployment Compensation (PEUC) grants thirteen additional weeks of UI to workers eligible for state unemployment benefits who are still jobless when they exhaust their state benefits (which typically last twenty-six weeks). The Continued Assistance for Unemployed Workers Act (CAUW), passed in December 2020, increased this to twenty-four weeks, but the additional eleven weeks can only be paid out in 2021.
• Pandemic Unemployment Assistance (PUA) allows traditionally ineligible workers to access up to thirty-nine weeks of unemployment benefits (up to forty-six in some states). This includes self-employed workers, part-time workers, and low-wage earners, as well as workers unable to work for COVID-19-related reasons (such as school closures or COVID-19-related quits).
• Federal Pandemic Unemployment Compensation (FPUC) added $600 per week to unemployment benefit payments for seventeen weeks between April and July 2020. The last FPUC benefits were paid out the week ending July 26, and Congress did not extend the program in 2020. The CAUW Act reinstated the FPUC program for the 11 weeks between January and mid-March 2021, but at only $300 per week.

In addition to these new programs, Congress authorized full federal funding—up from the typical 50 percent federal contribution—of the existing Extended Benefits (EB) and short-time compensation (STC) programs. Finally, in August 2020, former President Trump issued an executive order establishing the Lost Wages Assistance (LWA) program, which provided $300 per week for four to seven weeks in August and September 2020.⁹

As a result of expanded unemployment assistance programs, workers were eligible for up to forty-seven weeks of unemployment compensation in 2020.¹⁰ For seventeen of these weeks, they could have received $600 per week in FPUC top-offs, and for seven, they could have received $300 per week in LWA top-offs.