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    If a dependent child received a W-2 does the child show on their tax return a 12,000 standard deduction?

    #2
    Originally posted by arlo View Post
    If a dependent child received a W-2 does the child show on their tax return a 12,000 standard deduction?
    No, unless they earned $11,650 or more. .
    Last edited by Rapid Robert; 07-25-2018, 04:48 PM.

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      #3
      working dependent

      I should have ask where might I get the rules for earnings by dependent?

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        #4
        Pub. 929, IRS.com, Form 1040 instructions, Help in your tax prep software, etc.

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          #5
          Std ded rules

          See pages 24 - 26 of IRS Pub 501 ( https://www.irs.gov/pub/irs-pdf/p501.pdf )

          FE

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            #6
            working dependent

            Thanks gentlemen for your threads but I am talking about 2018 earned income by a dependent child. I want to know the formula used to calculate the tax if it has been released.

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              #7
              Originally posted by arlo View Post
              Thanks gentlemen for your threads but I am talking about 2018 earned income by a dependent child. I want to know the formula used to calculate the tax if it has been released.
              See §63(c)(5). The amounts have been adjusted per §63(c)(4).

              Not sure if you are changing your question. First you asked about the standard deduction, now you are asking about how to calculate the tax.

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                #8
                working dependent

                Under old rules it for a taxpayer that can be claimed by another taxpayer as a dependent, the standard deduction is the greater of $1,050, or earned income plus $350.00 up to the regular standard deduction.

                WHAT IS THE NEW RULES?

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                  #9
                  Originally posted by arlo View Post
                  Under old rules it for a taxpayer that can be claimed by another taxpayer as a dependent, the standard deduction is the greater of $1,050, or earned income plus $350.00 up to the regular standard deduction.

                  WHAT IS THE NEW RULES?
                  Well, the regular standard deduction for a single filer has changed to $12,000. Otherwise, no new rules.

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                    #10
                    working dependent

                    So it looks like a dependent taxpayer can make up to $12,000 tax fee.

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                      #11
                      Originally posted by arlo View Post
                      So it looks like a dependent taxpayer can make up to $12,000 tax fee.
                      As can any single taxpayer -- for the next eight years only. Of course, since most dependents are either full time students or under age 6, it's not easy to have legitimate earnings from work of $12K in a year. Probably will tempt lots of tax cheats to try paying their kids more through their own business for fake "jobs".

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                        #12
                        Standard deduction for dependent in 2018

                        Originally posted by Rapid Robert View Post
                        As can any single taxpayer -- for the next eight years only. Of course, since most dependents are either full time students or under age 6, it's not easy to have legitimate earnings from work of $12K in a year. Probably will tempt lots of tax cheats to try paying their kids more through their own business for fake "jobs".
                        I cannot find ANY IRS 2018 reference to support the below, but I have seen this same information on several believable web pages. The below is from Forbes Magazine, dated March 7, 2018.

                        Maybe someone can locate the "real" rules for the 2018 standard deduction for a dependent.

                        FE

                        ##############################

                        Standard Deduction Amounts

                        The standard deduction amounts will increase to $12,000 for individuals, $18,000 for heads of household, and $24,000 for married couples filing jointly and surviving spouses.

                        For 2018, the additional standard deduction amount for the aged or the blind is $1,300. The additional standard deduction amount increases to $1,600 for unmarried taxpayers.

                        For 2018, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,050 or the sum of $350 and the individual’s earned income.

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                          #13
                          I already posted the "real" rule in post #7. There is no mystery or unknown here.

                          "See §63(c)(5). The amounts have been adjusted [for inflation] per §63(c)(4)."

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                            #14
                            To Speedy Bob

                            I guess I was getting confused where you appeared to reply to Arlo, earlier today, that a "dependent" could automatically get a 2018 federal standard deduction of $12k.

                            From the gitgo, I was under the impression that was an incorrect assumption.

                            FE

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                              #15
                              My opinion is that this is a somewhat unintended extra tax break, like so much else about the bill, the result of sloppy, last minute legislation by the political party in charge.

                              I look at it this way: overall tax cut is due primarily to lower tax rates over large tax brackets, raising of AMT limits, etc. And for business, the lower corp rate or the QBI deduction.

                              Simplification, as opposed to cuts, was trying to make some trade-offs that didn't necessary cut taxes, but simplified the reporting.

                              So, non-dependent single filer in 2017 gets $6,350 + 4,050 = $10,400 deduction plus personal exemption. In 2018, instead they get $12,000 std. deduction. Almost a wash. For kids claimed, they lose the dependent exemption deduction, but get increased child tax credit, or "family" tax credit of $500 per dependent not eligible for CTC. Again, almost a wash. This is what you would expect from simplification (separate from cuts).

                              So far, so good. However, the dependent taxpayer in 2017 loses the exemption, because the claiming taxpayer gets it instead. He can only get up to $6,350 std deduction based on earned income. In 2018, the dependent still has no exemption, but the claiming taxpayer gets a credit instead. OK, a wash. But the dependent now also gets up to DOUBLE the previous standard deduction. That is a pure tax cut, not simplification. Unlike the calculation for the non-dependent filer, it is NOT almost a wash.

                              What could be the justification for this? It's not like the dependent taxpayer is creating more jobs in the economy for other people, or supporting a family. It's just a pure gimme, and as I suggested, highly likely to attract new forms of tax cheating, via paying one's kids bogus "earned" income from one's own company. Let's face it, at least up through age 18, a kid is not going to be worth more than minimum wage, and it would take about 1,000 hours, or half of a full time job, to earn that full std. deduction. What full time student can also take on a half-time job during the year? Summer is not long enough, since work weeks are generally limited to 40 hours max.

                              Now, maybe for the college student, it makes more sense. The parent claiming the exemption in 2017 might save $1,000 or more in taxes on that $4K exemption, but now in 2018 they only get $500. So a college student, who might realistically make more than minimum wage, can earn more on their own and still get a tax break, to make up for what the parents lost.
                              Last edited by Rapid Robert; 07-27-2018, 12:11 PM.

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