Q. What is kiddie tax? Do I have to pay for it?
A. Kiddie tax is a tax that is applied to your child's unearned income of more than $2,000.
Unearned income refers to investments, such as interest, dividends and capital gains. Income from wages or self-employment are not included.
The kiddie tax is meant to discourage parents from reducing their own taxes by shifting investments to their children, who generally have lower tax brackets. The Kiddie Tax once affected only children under age 14. That's how it got its name.
For 2014, your child is generally affected if they have investment income of more than $2,000 and falls into one of these categories:
In our next blog post we will discuss a few exceptions that kiddie tax does not apply.
A. Kiddie tax is a tax that is applied to your child's unearned income of more than $2,000.
Unearned income refers to investments, such as interest, dividends and capital gains. Income from wages or self-employment are not included.
The kiddie tax is meant to discourage parents from reducing their own taxes by shifting investments to their children, who generally have lower tax brackets. The Kiddie Tax once affected only children under age 14. That's how it got its name.
For 2014, your child is generally affected if they have investment income of more than $2,000 and falls into one of these categories:
- Under age 18 at the end of 2014,
- Age 18 at the end of 2014, with earned income (from working) that is less than or equal to half of their support for the year,
- Full-time student age 19-23 at the end of 2014, with earned income (from working) that is less than or equal to half their support.
In our next blog post we will discuss a few exceptions that kiddie tax does not apply.
RSS Feed
