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Medical expenses and kiddie tax

Forum|Forum|3 years ago
February 21, 2023
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I am a full time student. I had about 20k in capital gains last year and 2k from part-time job. I provided more than half of my support but not from earned income. I cannot be claimed as a dependent but I am subject to kiddie tax. I also had about 5k in medical expenses. I am also covered by HDHP from my parents and contributed $7k to HSA. However, California does not allow HSA deduction. Is it possible to reduce taxable income subject to kiddie tax with medical deduction instead? How do I enter that in TurboTax?

Best answer by Hal_Al

Q. Is it possible to reduce taxable income subject to kiddie tax with medical deduction?

A. Yes.

Both the federal and CA return have the 7.5% of AGI threshold for medical deduction. So, your itemized deductions will exceed your standard deduction of $2400 (earned income + $400). The federal return allows both the HSA adjustment (deduction) and itemized deductions.

B

Bsch4477

Employee

If you can’t be claimed as a dependent you are not subject to Kiddie tax. You can deduct medical expenses only if you itemize and can only deduct total medical expenses greater than 7.5 percent of your AGI.

J

Jeremy202Author

But here it says that kiddie tax applies if "19–23 at the end of 2022, but only if they were full-time students and their earned income (excluding scholarships) didn’t exceed half of their support costs in 2022"

B

Bsch4477

Employee

But that’s only if you are a dependent. You posted that you provided more than half of your support. If that is true you can’t be claimed as a dependent no matter what the source of that income as long as you spent it on your support.

Hal_AlAnswer

Employee

Q. Is it possible to reduce taxable income subject to kiddie tax with medical deduction?

A. Yes.

Both the federal and CA return have the 7.5% of AGI threshold for medical deduction. So, your itemized deductions will exceed your standard deduction of $2400 (earned income + $400). The federal return allows both the HSA adjustment (deduction) and itemized deductions.