Kiddie Tax, uncooperative parent

I need a little guidance from someone who has run into this situation. My client’s daughter sold stock for a long term gain such that the kiddie tax kicks in. Kiddo is 22 and a full time student with no other income.

Trouble is, my client’s AGI is lower than her ex husband’s; the other parent of the child and he is not willing to share his information, of course.

What would be the best approach in this situation? I’ve read one method is to mail in the return to IRS and have them figure the tax...uh, no thanks!

Would it be malpractice to beat it out of him?? That’s a joke, surely I jest. Thanks in advance!

Disengage!

No engagement exists yet, hold your horses there pardner!!

My client is the Mother, asking for a bit of advice for her daughter. Also, I read the Tax Act of 2017 alloted some relief in this particular instance, but this is for a 2015 return.

For divorced parents, don't you use the custodial parent's information only? Or were they still married in 2015?

No custodial parent exists, kiddo is beyond the age of custodian-ship (is that a word??). I’ve read the requirement is to use the highest AGI parent’s tax information. Parents were not divorced that particular year but filed separately. Divorce was final in 2016.

I need a way around this conundrum.

The child was 19 on Dec 31 2015?

From pub 929:

Parent's return information not available. If a child can’t get the required information about his or her parent's tax return, the child (or the child's legal representative) can request the necessary information from the Internal Revenue Service (IRS).

Kiddo was 22 and a full time student in 2015, my apologies.

Thanks for the Pub cite. Geez, start from the beginning, right??

For divorced parents, don't you use the custodial parent's information only?

Yes, but assuming we need the tax return for the bad parent, there’s a rule that allows you to get that parent’s tax return. See Reg. Sec. 1.1(i)-1T, Q&A 22, which will take you to Sec 6103.

But what I often do in these situations is file the return without computing the Kiddie Tax. Let the IRS figure it out. I realize you don’t like this approach, so that’s your call, although I’ve done it a bunch of times.

Also, I read the Tax Act of 2017 alloted some relief in this particular instance

Not sure what you mean by "alloted [sic] some relief". They changed the tax rates for kiddie tax, so that they no longer depend on the income of any other relatives.

Jeff, so, when you send in the return and let the IRS figure the tax, do they simply adjust the return and send the client a bill? Or, do they send a letter requesting "additional information to complete the return" and then we respond, "The jerk won't supply the information...."?

I'm just wondering about the turn around time/process it takes to get it done.

Thank you!

Makbo, what I meant was, in 2018 and in the future, we no longer have to worry about an uncooperative parent not supplying his/her return information to complete the kiddo's return.

Makbo, what I meant was, in 2018 and in the future, we no longer have to worry about an uncooperative parent not supplying his/her return information to complete the kiddo's return.

OK, but you called it "relief". From what I'm told, in many cases it will actually result in an increase in tax. And preparers like Jeff-Ohio will no longer have a phony reason for not filing a complete and accurate return (as there is no option available similar to Underpayment of Estimate tax penalty to have the IRS figure the kiddie tax for the taxpayer).

Come on Makbo, there's enough word policing going on what with the imaginary 63 (and counting) different gender types floating around in la/la land. I was simply making a comment regarding the "simplification" of the kiddie tax rules/laws will make things easier in this particular situation. Also, it was late at night when I posted and I think the melatonin gummy bear was kicking in (my kids seem to like them, so I thought, why not?) Now, we all know what happens when Congress "simplifies" the tax laws, we end up paying more taxes, no doubt.

Also, I don't know if the use of the word, "phony" is justified here. Where little guidance exists, practically speaking, what's a practitioner to do in unchartered territory than to throw it against the wall and see what sticks? You get my point, I don't mean that literally. Anyway, I appreciate your attention to detail, my friend, and you know I am messing with you. If not, please refer to one of my 818 previous replies (soooo close to 1,000!!!).

Where little guidance exists, practically speaking, what's a practitioner to do in unchartered territory than to throw it against the wall and see what sticks?

What's uncharted about this instruction? "reasonable estimates can be used. Enter “Estimated” next to the appropriate line(s) of Form 8615." Not filing a Form 8615 at all when one is clearly required is not "throwing something against the wall".

The 8615 instructions then say "[i] When the correct information is available, file Form 1040X, Amended U.S. Individual Income Tax Return." [i]

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Nice work Makbo, you have just been hired as my research consultant! I can only pay you in melatonin gummy bears until I really get this thing off the ground, so I hope that is ok.

But, seriously, I have nothing to go on, what "estimates" would I use? I've never seen a return filed by this character, only his wife's return and she hasn't spoken or seen him for over 4 years. He doesn't answer her phone calls, answer her emails, texts, etc. Can I use your return for an estimate? Would you like to adopt this child? You know, for 39 cents a day...

I tell you what Makbo, next time I will just "use the yellow box" so I don't bother you with such a "simple" question. Oh, that's right, there is no yellow box!!! Where is Kevin when you need him???

Thank you SJR, I appreciate your response. At least you didn't make me cry and crawl off to my safe space.

But what I often do in these situations is file the return without computing the Kiddie Tax. Let the IRS figure it out. I realize you don’t like this approach, so that’s your call, although I’ve done it a bunch of times.

I assume that such a return omitting the kiddie tax would surely include an 8275, right?

I assume that such a return omitting the kiddie tax would surely include an 8275, right?

No, I don’t bother. I’m fine with fighting any issues that might come of it and none ever do.

Jeff, so, when you send in the return and let the IRS figure the tax, do they simply adjust the return and send the client a bill? Or, do they send a letter requesting "additional information to complete the return" and then we respond, "The jerk won't supply the information...."?

Quite honestly, the return gets processed as is and nothing ever comes of it. I can’t say the IRS, without doing a bunch of digging, can even identify the “applicable” parent.

Also, which parent is Sec 6201(c) referring to??? I’ve always wondered…

My view is that there are very few "perfect" tax returns.

Also, which parent is Sec 6201(c) referring to??? I’ve always wondered…. I don't know. Maybe the parent that is referred to in section 73a)? The one who under state law would be entitled to the kid's income from compensation.