Expenses allocable to a portion of a dwelling unit rented out are deductible under the vacation home rules. The amount of the deductible rental expenses would be the expenses attributable to that portion of the unit. And the days to be taken into account under that limitation rule would be the days on which the portion of the unit is rented at fair rental during the tax year and the days on which the portion of the unit is used for any purpose during the tax year.
Under pressure from members of Congress, the IRS agreed to provide relief from the underpayment of estimated tax penalty due to the changes brought about by TCJA and concerns taxpayers may be under- withheld. The IRS indicated they would provide an 85% safe harbor. Most commentators believed that meant replacing the “90%” in the normal 90% of the current year’s tax liability safe harbor with “85%”.
Under the Tax Cuts & Jobs Act (TCJA), and beginning in 2018, a child’s tax on unearned income is no longer based upon the parent’s taxable income for federal purposes. However, California has not conformed to that change. So, for 2018 here is how kiddie tax is handled for Federal and California purposes.