Question

Does this Make sense...Entering UC Compensation.

Forum|Forum|5 years ago
February 27, 2021
1 reply
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I am entering data for my full time college student, dependent daughter on her return. It us usually straight forward. She makes about 4K over the summer at an amusement park and gets a small ($150 or so) federal refund each year.

This year, her job atthe amusment park was cut short by the pandemic clode down. She qualified for PA PUA insurance. (Regular UC + extra $ due to pandemic). She finished up at the amusement park and decided to take a PT job at a local store. She is still a FT student and a dependent.

Her income is about $4k from the brief time at the amusement park and store and another $14K from the PA PUA. The PA PUA withheld $1400 in federal taxes.

In my first walk thru Turbo Tax, I either missed or it did not prompt for UC. I had entered $4K income and it said she was getting a refund of $130. I knew the UC must be entered. did a search and went to the form to enter it. I entered the 14K and the tax withheld: $1400.

I finished up. It did its review. It found an area that I needed to fill in. I need to input ***MY and MY WIFE'S** taxable income off our 1040 form, line 15. I do not EVER recall having to do this before?????

Anyway, when done, suddenly, instead of getting the $130 refund, she owes about $2400.

I have no problem with this...but it t correct???

So she made about $4k working, got 14K in UC and paid in a total of about $1600 in fed taxes.

So on 18K income she will pay $1600(total withheld) + $2400 it says she owes for a total of $4000.

Does that sound right? Are ***MY** wages somehow figuring because she is dependent or something. I just want to make sure this makes sense. The PUA was a blessing don't get me wrong...but does $4K tax on 18K for a dependent make sense?

LenaH

Yes. Your daughter is being subject to "kiddie tax" because she had more than $2,200 of unearned income. Unemployment compensation is considered unearned income and therefore, she is subject to kiddie tax.

Form 8615, Tax for Certain Children Who Have Unearned Income, is required when a child meets all of the following conditions:

The child had more than $2,200 of unearned income.
The child is required to file a tax return.
The child either:
1. Was under age 18 at the end of 2020,
2. Was age 18 at the end of 2020 and didn’t have earned income that was more than half of the child's support, or
3. Was a full-time student at least age 19 and under age 24 at the end of 2020 and didn’t have earned income that was more than half of the child's support.
At least one of the child's parents was alive at the end of 2020.
The child doesn’t file a joint return for 2020.