What is Kiddie's tax?
In order to ensure that taxpayers do not hide the income from investing taxes by investing under the name of a minor child, tax laws in the United States have been changed and created a special treatment of investment income of the minor. If the income exceeds a certain limit, its part is taxed at a higher tax rate of parents. This investment tax has become known as the The Kiddie Tax. In this situation, all interest, dividends, capital profits, rent and license fees are qualified as an investment income. If a child receives taxable social security, annuity or pensions as a recipient of trust, this income will also be included. If they exceed the prescribed amount, Kiddie meets the first requirement.
The next step is to find out whether the child meets age and support. Originally the child's tax was only related to children under 18 years of age, but later was extended by 18 -year -olds who do not provide more than half of their support as well as childrenAt the age of 19 to 24, who are full -time students and do not provide more than half of their support. If the child provides most of his / her own support, or if he / she is married and gives a joint return with her husband, he is excluded from the child's tax rules. This tax only applies to children with at least one living parent; Orphans are not subject to tax tax.
To determine who was the primary provider of the child, it is necessary to find out the full cost of supporting it for this calendar year. Support includes all the money spent on accommodation, food, clothing, recreation, transport and education. If a child lives at home, then his accommodation costs are the percentage of the value of renting house and public services. For example, if a four -member family lived in a house that would rented for $ 1,000 (USD) per month, then part of the child would be $ 250 per month, plus a quarter of public service accounts. Any scholarship received by a full -time student is not considered to be support forNone of the child's earnings he placed on the savings account.
If a child is considered to be responsible for Kiddie's tax, the 8615 Internal Revenue Service (IRS) must file a form. Various worksheets are provided to determine the taxable child's income as well as for their parent's tax group. The child can be taxed to a small extent of his investment income at his tax level, while the rest should be taxed at the parent level and the parent is in a higher tax group. If the child is in a higher holder, then all its income will be taxed at a higher rate.
If a child is a child is married and gives a common return, their joint income is used in this form. If parents are married but serve separately, the parent with the highest income will be used. In the case of a single or divorced parent, parents' income in custody is required for the form. Things are even more complicated if the parent has remarked again. If serving with its new spousesM, a common income is required and if he / she is given separately, then the intake of the highest spouse is used, although this person is not a biological parent of the child.