Have you heard about the changes to the kiddie tax as a result of the Tax Cuts and Jobs Act of 2017? If you have children age 24 or younger they could be subject to the kiddie tax if they have unearned income.
The major change is that kiddie tax is no longer taxed at the parent’s tax rates, now it is taxed at the same rates paid by trusts and estates. This change is currently in effect for tax years 2018-2025. Although this is a more simple calculation for tax preparers because the child does not need to wait for the parent’s return to be complete, the trust and estate tax rates are compressed so the child could end up paying a higher tax rate than before the rule change.
For more information read this helpful article by Market Watch which includes more details and examples of different tax situations.
For more information read this helpful article by Market Watch which includes more details and examples of different tax situations.
RSS Feed