Kiddie Tax for college age dependent

[MarkCTX]

Client is divorced father of 23 year old college student. Student has enough investment income to trigger Kiddie Tax. Which parent's tax rate do we use? Unknown if mother has remarried, but the mother has taken the dependency deduction. Rules say use the custodial parent's tax rates, but neither parent has "custody" as the "kid" is 23. Does taking the dependency exemption automatically make the parent the custodial parent? Any experience with this scenario?

Mark

[David1980]

I get what you're saying with regards to no custodial parent.

If we trust the instructions, I think the answer is simple.

If the parents were unmarried, treated as unmarried for
federal income tax purposes, or separated by either a
divorce or separate maintenance decree, enter the name
and SSN of the parent with whom the child lived for most
of the year (the custodial parent).

"the parent with whom the child lived for most of the year" - custodial parent is in parenthesis, so I don't think that aspect matters. This to me feels like a "safe" answer.

[Roland Slugg]

One of the problems with the "kiddie" tax for older dependents is knowing the tax bracket of the "custodial" parent. If the 23-yo will be filing his own return, he will need to know that, but his mother may not wish to divulge it. His choices, then, are either to guess at the mother's income or advise his mother to report HIS income on HER return. And he can only do the latter if he has no other income of his own.

Are you sure the kiddie tax applies? You said he is 23, but will he turn 24 before the end of the tax year? And was he a full-time student for at least five months during the year? Did he have enough income so that HE, not his mother, furnished over half of his support for the year? If that was the case, the kiddie tax doesn't apply, and his mother was not entitled to claim a dependency deduction for him. Double check the kiddie-tax rules before proceeding.