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Old 12-27-2016, 10:49 AM
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Smile Question about the kiddie tax and being claimed as a dependent. HELP PLEASE

I am a 22 y/o person working full time, but I was a student for all or part of 5 months of this year which makes me a full time student. By year end, I will have earned income of around 10k and unearned income of around 20k from the sale of stock. I will be claimed as a dependent on my parent's taxes.

My question is about the kiddie tax. Will being claimed as a dependent effect my capital gains tax?

Because I was a full time student and under 24, my parents can claim me as a dependent because they provided half of my support.

However, the kiddie tax requirements state that as long as I had enough earned income to have provided half of my support (which I did, 10k is more than enough) , then I am not subject to the tax.

But because the requirements to claim a dependent state that if someone provided half of your support, they can claim you. So because I made enough to have provided half my support, I am not subject to the kiddie tax, however, because I didn't actually use my earned income to cover half my support, I can be claimed as a dependent. Right?

Please let me know if I got this wrong. I don't want to get hit with a huge tax on my capital gains.


Last edited by Whatagreatguy : 12-27-2016 at 11:00 AM. Reason: Better title


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Old 12-27-2016, 10:54 AM
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Smile More info

Also, because I will only have 30k in total income, will my capital gains tax be 0 because it is below the 38k threshold? Assuming of course that I am not subject to the kiddie tax.



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Old 12-28-2016, 04:38 PM
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My question is about the kiddie tax. Will being claimed as a dependent effect my capital gains tax?======>> Yes but it depends UNLESS your tax bracket is higher than 15%(UNLESS your tax rate is higher than 15%, your LTCG tax?d be $0);since as a dependent, you can not claim your personal exemption of $4050 for 2016, this?d increase your taxable income and affects LTCG rate on your unearned income of $20K.Generally, you are affected by the Kiddie Tax ONLY if your unearned income exceeds $2.1K and your age is18 at the end of 2016, with earned income that is less than (or equal to) half of your support for the year; or age 19-23 at the end of 2016, with earned income that is less than (or equal to) half your support, and you are full-time students. I guess you do not pay tax on your LTCG of $20k as your tax bracket is lower than 25%


Because I was a full time student and under 24, my parents can claim me as a dependent because they provided half of my support. ===>Right aslongas you do not support half of your support, then, even if you need to file your return you can be calmed as a dependent by your parents,

However, the kiddie tax requirements state that as long as I had enough earned income to have provided half of my support (which I did, 10k is more than enough) , then I am not subject to the tax. ====>Correct kiddie tax is not for you

But because the requirements to claim a dependent state that if someone provided half of your support, they can claim you. So because I made enough to have provided half my support, I am not subject to the kiddie tax, however, because I didn't actually use my earned income to cover half my support, I can be claimed as a dependent. Right?=============>>Correct; as you said, your earned income amt of $10k EXCEEDS half your support, kiddie tax is not applied to you;however, you can be claimed by your parents UNLESS you support half of your support.



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