Tax Tip of the Week: Kiddie Tax |
February 2, 2011 | No. 28
Will Your Family Be Hit With Kiddie Tax?
Children with investment income may have part or all of it taxed at their parents’ tax rate rather than at the child’s rate. Investment income includes interest, dividends, capital gains and other earned income.
The child’s tax must be figured using the parents’ rates if the child has investment income of more than $1,900 and meets one of three age requirements for 2010.
· The child was born after January 1, 1993
· The child was born after January 1, 1992, and before January 2, 1993, and has earned income that does not exceed one-half of their own support for the year.
· The child was born after January 1, 1987, and before January 2, 1992, and a full-time student with earned income that does not exceed one-half of the child’s support for the year.
We can answer questions about your specific situation.
Mark Vitek, CPA/PFS, CFP®
…until next week.