Thanks for the link and explanation. I've never gifted and have never been in this situation. So what happens in my case when Kiddo sells? On whose tax return $18K CG is reported to, mine or his? If its on mine then this whole thing invalidates ACA eligibility as my son will not have any income. Being in med school and earning> 100% FPL income will be impossible for him so we'll just have to buy his health insurance from his school.Investopedia is not an authoritative source on tax law. Dependency is not a criterion.
I went through IRS "Worksheet for Determining Support"
Line 1: Enter the total funds belonging to the person you supported, including income received (taxable and nontaxable) and amounts borrowed during the year, plus the amount in savings and other accounts at the beginning of the year. Don’t include funds provided by the state; include those amounts on line 23 instead.
His loan amount of $40.5K for Med School itself will go over 50% of his own support and he shall be able to file his tax return as Independent.
About Kiddie Tax: My son will not be dependent on me and will file his own taxes.
The kiddie tax is imposed on individuals under 18 years old or dependent full-time students under 24 years old whose investment and unearned income is higher than an annually determined threshold.
https://www.investopedia.com/terms/k/kiddietax.asp
But in my case, MFJ and have been and will be for at least 10 years in 0% long term CG/Dividends so Kiddie tax/No Kiddie Tax will matter or de-rail my plan.
I do not think earned income is a requirement for ACA .
Please correct me if I missed anything.
https://www.irs.gov/taxtopics/tc553
Statistics: Posted by aum — Mon Dec 23, 2024 1:38 pm — Replies 8 — Views 340