Under new tax law, for tax years beginning after December 31, 2017, the taxable income of a child’s earned income is taxed the same as single individuals, and taxable income of a child’s net unearned income is taxed the same as trusts and estates.
Background: Under older tax law “kiddie tax” provisions, the net unearned income of a child (total unearned income, minus $2,100, would have been 2018) was taxed at the parents’ tax rates if higher than the child’s rate. The balance of child’s taxable income (i.e., earned income, plus $2,100 (for 2018), minus the child’s standard deduction) was taxed at the child’s rates. The kiddie age is less than 19 by the close of the tax year, or 24 if the child was a full-time student.
Zaher Fallahi, Tax Attorney, CPA, is a Tax Controversy Attorney, and defends taxpayers in resolving their Income Tax and Offshore Accounts (FBAR and FATCA) problems. Telephones: (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), e-mail firstname.lastname@example.org