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“Kiddie Tax”

February 14, 2019 | Articles

When your children who are under 19 (or under 24 if they are a student) have investment income over $2,100 they are subject to the “Kiddie Tax.” Kiddie tax was designed to prevent parents from shifting investment income to their children to take advantage of their lower tax brackets. Previously, this tax was at the parents’ much higher rate. Beginning in 2018, the child’s tax began to be based on the trust and estate rates. The brackets for trusts and estates are condensed and reach the 37% bracket once taxable income is more than $12,501. Read more about the Kiddie Tax at IRS.gov.