Kiddie Tax and American Opportunity Tax Credit

Forum|Forum|5 years ago
May 11, 2020
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It appears from using Turbo Tax 2019 that if someone is not eligible for the American Opportunity Tax Credit (either completed four years of post secondary education, or maybe a non qualifying institution?) that he is not subject to Kiddie Tax although he may be a full time student. Can someone tell me if that is accurate and how I could verify that?

macuser_22

Employee

Apples and oranges. The "Kiddie tax" (form 8615) is a tax on a child under age 24's certain unearned income reguardless of the source. The AOC is an educational credit. The two are not related in any way.

Form 8615 must be filed for anyone who meets all of the
following conditions.
1. You had more than $2,200 of unearned income.
2. You are required to file a tax return.
3. You were either:
    a. Under age 18 at the end of 2019,
    b. Age 18 at the end of 2019 and didn’t have earned income
    that was more than half of your support, or
    c. A full-time student at least age 19 and under age 24 at the
    end of 2019 and didn’t have earned income that was more than
    half of your support.
    (Earned income is defined later. Support is defined below.)
4. At least one of your parents was alive at the end of 2019.
5. You don’t file a joint return for 2019.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

Hal_Al

Employee

Q. Is it true that If a student is not eligible for the American Opportunity Tax Credit, he is not subject to Kiddie Tax although he may be a full time student?

A. No, that is not accurate, as the other answer indicates. Note rule 3.c. It's being a full time student (under 24) that makes him subject to the kiddie tax. A part time student (over 18) would not be subject to the kiddie tax.

There are rules for the AOTC; and then there are additional rules for a full time student, under age 24, qualifying for the refundable portion of the AOTC, on his own return. Those rules are near identical to the rules for the kiddie tax. That may be the source of confusion.