The kiddie tax is higher than ever, thanks to the new 3.8% Net Investment Income Tax.
Lawmakers created the “kiddie tax” to prevent you from shifting income to your children and taking advantage of their lower tax brackets. But you may be surprised to find that the kiddie tax can spring up even when you do not use an income-shifting strategy.
Do your kids have savings accounts, CDs, or any other type of investment that generates income? If so, the kiddie tax could take away their low individual tax rates and, instead, make those children pay taxes at your very high rates.
The kiddie tax hammers your children on all their unearned income from whatever source, even if they never got a dime from you ... Log in to view full article.