schirallicpa Posted February 9, 2012 Report Share Posted February 9, 2012 When we put money into an IRA, it is our earnings that we are deferring tax on. Grandparents died and left child as beneficiary on an IRA. Parents drew from her IRA. She received 1099R. The software is calling it investment income and generating kiddie tax. (Distribution was made from funds of $5000 to cover dental expenses.) I know she didn't "earn" it, but the grandparents did. Why does the character of the income change? Any thoughts? Quote Link to comment Share on other sites More sharing options...
Lion EA Posted February 9, 2012 Report Share Posted February 9, 2012 For Kiddie Tax purposes, the IRS defines Investment Income as everything that is not specifically excluded, and not much is excluded. I think you can find out what has to be included or can be excluded in the instructions to the form. (I think unemployment counted as investment !!) Off to a client's site or I'd look it up. Quote Link to comment Share on other sites More sharing options...
schirallicpa Posted February 9, 2012 Author Report Share Posted February 9, 2012 I looked it up in the Pub. Yep. It stinks. Quote Link to comment Share on other sites More sharing options...
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