New Rules

New Rules

The Tax Cuts and Jobs Act ushered in new rules for the “kiddie tax,” which govern the taxation of unearned income of certain young taxpayers. Under prior law, children having more than $2,100 (in 2017) of unearned income were taxed at the same rate their parents paid (unless the child’s rate was higher). On 1/1/18, the kiddie tax rules switched to applying the same tax rates used for trusts and estates. The effect of this and other changes are that a child’s tax won’t be affected by the parents’ rates and may result in higher tax. Contact us about your situation.