bill-deja[at]weacca.com wrote:
- quote -

asked why is the 4972 treated differently than the 8814. Then you
asked for confirmation that if you are subject to AMT you
don't appear to be paying tax on the excess $900.
Those questions were answered.

If you are now asking whether a taxpayer who is subject to AMT
can save his family money by adding his children's investment
income (interest) to his own tax return over the children filing
their own returns.... then the answer is yes in your scenario.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 8, 4:29*pm, Alan <sfcnm-...[at]yahoo.com> wrote:
- quote -

Okay. Three cases

1. Consider someone filing with Head of Household status, 4 unmarried
dependent children, with 119975 of earned income, no other income, no
above the line deductions, not itemizing, no foreign tax credit. AGI
is 119975, taxable income is 97025, and on F1040 line 44 is 19319.
TAMT is 19667, so line 45 is $348. and line 46 is 19667.

2. Same facts, but in addition, each of the kids has 1500 of interest
income. Using forms 8814 for each of the kids, line 44 is now
19559. TAMT is still 19667, so line 45 is now 108, and line 46 is
19667.

3. Same facts as 2, but instead of using for 8814 for the kids, each
files his/her own tax return. Parent's tax is still 19667 [see case
1]. Each kid also pays 61 of tax on their return.

Am I missing something?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 7, 5:50*pm, "D. Stussy" <s...[at]bde-arc.ampr.org> wrote:
- quote -

First, the relevant law does not mention investment income. Using the
word, "investment," is a screw up that can be laid at the door of the
Internal Revenue Service.

Second, the kiddie tax can apply to individuals who are old enough to
gamble legally.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

bill-deja[at]weacca.com wrote:
- quote -

The 4972 tax removal from Line 35 on the 6251 normalizes the
regular tax to the tentative minimum tax as the lump sum pension
income is not in AMTI.

The tentative minimum tax includes the tax on the child's
investment income that exceeds $1800 as the excess is on Line 21
and in AMTI.

The regular tax on the 1040 includes the tax on the child's
investment income in excess of $900 up to a maximum of $900. The
tentative minimum tax would not include any tax on any of the
child's investment income in excess of $900 up to a maximum
amount of $900.

So.. if your tentative minimum tax is higher than the adjusted
regular tax, you have AMT. As the AMT is higher than the regular
tax which includes the tax on that excess $900, what does it
matter that AMTI didn't have that portion of the child's income?
You're still paying more tax.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Alan" <sfcnm-mtm[at]yahoo.com> wrote in message
news:m03rl.1132$im1.332[at]nlpi061.nbdc.sbc.com...
- quote -

To me, "investment income" is not equivalent to "net unearned income" (but
is a subset). They are not equivalent terms.

If I were a lay-person, seeing "investment income" as the term used in the
instructions, I would not consider government benefits (unemployment or
SSRB), lottery winnings, a state tax refund, etc. to be included. (OK, so
minors can't gamble, but they can inherit someone else's winnings.)

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Speaking of the kiddie tax, why are forms 4972 and 8814 treated
differently on line 35 of form 6251. I can't help thinking that
following the instructions means that if you are using form 8814, and
subject to the AMT, you don't pay any tax on the second 900 dollars of
the child's income. Am I missing something?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Mark Bole wrote:
- quote -

unearned income.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Alan wrote:

- quote -

Just by coincidence, I saw 1099-SSA for a 12-yr old dependent today
(survivor benefits), I wonder if such unearned income could trigger the
kiddie tax... (too late to research it tonight). Suppose the recipient
had enough other income to push SS into the taxable column, etc.

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

D. Stussy wrote:
- quote -

pubs and form instructions call it investment income.
The definition is in Sec. 1(g)(4).

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Alan" <sfcnm-mtm[at]yahoo.com> wrote in message
news:0%_ql.21511$Ws1.14462[at]nlpi064.nbdc.sbc.com...
- quote -

The form 1040 instructions say the above too (for form 8615)....
- 1040 Instr., page 36

- quote -

That seems logically wrong, but I guess it's time to look up the tax in the
IRC and see what the law actually says about its computation.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Had a client who was a dependent of her parents. She had a small
amount of wages and $6800 of unemployment compensation. I
couldn't figure out why Taxwise Software was triggering Form 8615
(The Kiddie Tax). It turns out that there is a different
definition of investment income on Form 8615 then there is on
Form 8814. This is the form that allows the parents to include
the investment income on their return..

For Form 8814, investment income includes interest, dividends and
capital gain distributions.

For Form 8615 (Kiddie Tax) investment income is Form 1040 Line 22
(Total Gross Income) less Line 7 (Wages).

Go figure!

P.S. It can get a lot more complicated depending upon what type
of income or loss is being reported and/or excluded on the
child's and parents' returns.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >