Ill try to make this short.
1) Ive had a custodial account in my sons name since he was born. Hes now 18 and in college.
2) This is the first year he is filing a tax return as he has a part time job.
3) Earlier in 2017 , I made a large transfer putting his college money in more conservative investments. It caused a large capital gain but is taxed at his rate and filed on his returns, since the acct is in his name.
4) After completing his return including his income, his dividends and capital gains (which are in the $14000 range), his refund in Turbo Tax shows to be $300. But then it asks for his parents income from my 1040.
5) Once I enter my income his $300 refund turns into a $1800 tax bill.
Does he have to pay a larger amount of tax on the $14000ish unearned income just because his parents income is over a certain level?
1) Ive had a custodial account in my sons name since he was born. Hes now 18 and in college.
2) This is the first year he is filing a tax return as he has a part time job.
3) Earlier in 2017 , I made a large transfer putting his college money in more conservative investments. It caused a large capital gain but is taxed at his rate and filed on his returns, since the acct is in his name.
4) After completing his return including his income, his dividends and capital gains (which are in the $14000 range), his refund in Turbo Tax shows to be $300. But then it asks for his parents income from my 1040.
5) Once I enter my income his $300 refund turns into a $1800 tax bill.
Does he have to pay a larger amount of tax on the $14000ish unearned income just because his parents income is over a certain level?