Law Offices of Frye & Vazquez, P.L. - estate planning
Se Habla Español

Call Today
305-931-3200

Coronavirus Update: We are equipped to address your estate, asset protection, and healthcare designation planning with proper precautions in our office or remotely through telephone and video conferencing. Social distancing does not have to stop you from attending to your planning needs. Learn more about our services during COVID-19 here or call us at 305-931-3200 for further details.


Contact Us
305-931-3200

Blog

What do you need to know about the Kiddie Tax?

Not every child in Florida and elsewhere in the United States makes a significant amount of money outside of a job. However, some are fortunate enough to receive a decent amount of spending money from their loved ones. Is this money taxable, you may wonder? If your minor children get an allowance, received monetary gifts from Grandma and Grandpa or have other means of enjoying a full piggy bank – without having a job – you may be interested in learning about the Kiddie Tax.

What is the Kiddie Tax? According to Intuit, the Internal Revenue Service created this tax to discourage parents from placing investments and assets under their children’s names, thus reducing their own tax responsibilities. Originally, the Kiddie Tax applied to kids under the age of 14. Now, it applies to all children who were under 18 by the end of the year, or those under 18 with jobs who made equal to or less than half of the amount of their parental support. Your children between the ages of 19 and 23 may also be subject to the Kiddie Tax if their income was less than half or equal to your monetary support and they were full-time students.

How does the Kiddie Tax work? If your child received more than $2,100 in gifts, allowance or other unearned income, any income above that amount would be taxed according to your marginal tax rate. Income earned from a job is not subject to the Kiddie Tax.

Tax issues can be complicated, especially if they concern your children’s money. Therefore, this information is meant only to educate you and should not replace the advice of a lawyer.

badges

Archives

FindLaw Network