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DEPENDENT CHILD WITH TAXABLE INCOME


DEO

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Dependent child has 14,000 in earned income.

I am looking into the ATX/Max program on how to tell it that the TP is being claimed as a dependent, so that he can pay the appropriate taxes, but cannot see the check box.

If I check the single box, then he gets the full exemption, which is wrong.

Any help is appreciated.

Thanks

Deo

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There isn't an exemption, only a standard deduction.  On the Main page just above Signature there is a check box to check if someone CANNOT claim you as a dependent.  Seems odd but if that box is checked, the standard deduction goes to $12,000 instead of a much lower amount.  Bunny hop from line 8 for the worksheet.  I think that should explain it.

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Margaret, I agree something is weird with ATX. Here is the rules from the IRS

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.Mar 7, 2018

Is the child in the OP under 18? While it doesn't seem reasonable that a person could support themselves on 14K per year, it certainly can be questionable when asking if they have provided more than 1/2 of their own support.

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Part of your question is that prior to 2018, you could see when some was claimed as a dependent because you had two places to check. One was the check box "YOUSELF" on page 1 of the 1040 and the other place to check was page 2 when the personal exemption amount was 0 for dependents. Now those places to check don't exist and you have single for the dependent with the same 12K standard deduction.

These are the resources you have at your disposition to check if the person is filing as a dependent:

1.- If you are doing the return for both supporters and dependent, efile the supporters return first making sure you are claiming the dependent. After the federal is accepted, efile the dependent. If you make a mistake on the dependent's return, the IRS will reject it.
2.- When preparing the dependent's return, make sure you take out the X as shown on my post above AND even if the dependent didn't have health insurance, check the box for health insurance. If you did it correctly, ATX will not let you create the efile until you uncheck the health insurance question. If the efile is created with the health insurance check marked, you are filing as single and claiming the exemption.
3.- When the efile has been created, read that ATX will read something like" (someone can claim this person as a dependent). 

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The standard deduction for dependents can indeed be up to $12k.  The quote from Terry D appears to be from March 2018, before the pubs and instructions were updated to reflect the changes from the TCJA.  This from a later version of Pub 501 (underscore added): 

Standard Deduction for Dependents

The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the greater of:

  1. $1,050, or

  2. The individual's earned income for the year plus $350 (but not more than the regular standard deduction amount, generally $12,000.

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