Kiddie Tax

Dictionary Says

Definition of 'Kiddie Tax'

A special tax law created in 1986 imposed on individuals under 17 years old whose earned income is more than an annually determined threshold. Any extra income earned above of the threshold is taxed at the guardian's rate.
Investopedia Says

Investopedia explains 'Kiddie Tax'

This law is designed to prevent parents from exploiting a tax loophole where their children are given large "gifts" of stock. The child would then realize any gains from the investments and be taxed at a far lower rate compared to if the parents had realized the stock's gains.

Originally, the tax only covered children under 14 years of age as they cannot legally work and therefore any income was usually the results of dividends or interest from bonds. However, the tax authorities realized that some parents would take advantage of the situation by giving stock gifts to their older, 16-to-18-year-old children.

As of May 2007, the government is seeking to tighten the kiddie tax to cover individuals under the age of 18 (or under the age of 24 if they are full time students). However, there are some exceptions provided for individuals that work paid jobs.
Search results for

'Kiddie Tax'

  • A "Kiddie Tax" Overview For Parents

    http://www.investopedia.com/articles/pf/07/kiddie_tax.asp
    A "Kiddie Tax" Overview For Parents. March ... Investors. The massive Tax Reform
    Act of 1986 first introduced the concept of the "kiddie tax". ...
  • Capital Gains Tax Cuts For Middle Income Investors

    http://www.investopedia.com/articles/pf/07/capitalgains.asp
    ... year waiver of income limits on Roth IRA conversions in 2010, the extension of small
    business expensing thresholds and the expansion of the so-called kiddie tax ...
  • 7 Year-End Tax Planning Strategies

    http://www.investopedia.com/articles/tax/09/offset-capital-gains.asp
    ... The one issue you want to be aware of when gifting to children is the kiddie tax
    rules, which could have an adverse effect on the above strategy. ...
  • Give Your Taxes Some Credit

    http://www.investopedia.com/articles/tax/08/tax-credit.asp
    ... and How Expanded Kiddie Tax Affects Families.); Dependent Care Credit - This credit
    helps taxpayers defray the costs of paying for childcare services, as long ...
  • Cisco Dunks … On The Kiddie Hoop

    http://stocks.investopedia.com/stock-analysis/2011/Cisco-Dunks--On-The-Kiddie-Hoop-CSCO-JNPR-HPQ-FFIV-RVBD-JDSU-ADTN1110.aspx
    ... Article; Comments (0). Cisco Dunks … On The Kiddie Hoop. Posted:
    Nov 11, 2011 17:20 PM by Stephen D. Simpson, CFA. ...
  • Education Savings Account: Conclusion | Investopedia

    http://www.investopedia.com/university/retirementplans/esa/esa4.asp
    ... For further reading, check out How Expanded Kiddie Tax Affects Families, How And
    When To Switch Your 529 Plan, Filing Your Child's First Income Tax Return and ...
  • CFP Study Guide - Financial Planning: Process and Rules ...

    http://www.investopedia.com/exam-guide/cfp/financial-planning-process-rules/default.asp
    ... Personal and Dependency Exemptions; 32.7 Taxable Income; 32.8 Tax Liability;
    32.9 Kiddie Tax; 32.10 Self-Employment Tax; 32.11 Tax Credits; ...
  • CFP Study Guide - Principles of Risk and Insurance - Introduction ...

    http://www.investopedia.com/exam-guide/cfp/principles-of-risk-and-insurance/default.asp
    ... Personal and Dependency Exemptions; 32.7 Taxable Income; 32.8 Tax Liability;
    32.9 Kiddie Tax; 32.10 Self-Employment Tax; 32.11 Tax Credits; ...
  • CFP Study Guide - Principles of Risk and Insurance - The Risk ...

    http://www.investopedia.com/exam-guide/cfp/principles-of-risk-and-insurance/cfp2.asp
    ... Personal and Dependency Exemptions; 32.7 Taxable Income; 32.8 Tax Liability;
    32.9 Kiddie Tax; 32.10 Self-Employment Tax; 32.11 Tax Credits; ...
  • CFP Study Guide - Property, Casualty and Liability Insurance ...

    http://www.investopedia.com/exam-guide/cfp/property-casualty-liability-insurance/default.asp
    ... Personal and Dependency Exemptions; 32.7 Taxable Income; 32.8 Tax Liability;
    32.9 Kiddie Tax; 32.10 Self-Employment Tax; 32.11 Tax Credits; ...

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