Like it or not, taxes are part of life. Each year the IRS releases important inflation adjusted tax numbers that could impact your taxes. Understanding them could help your tax-saving strategy.
“Kiddie” Tax Children under age 18; children under age 19 with earned income less than ½ of support; dependent full-time students under age 24 with earned income less than ½ of support.
Exemptions $2,100** AMT exemption $7,400 plus child’s earned income.
* Exemptions are phased out by 2% for each $2,500, or portion thereof, above specified income thresholds ($259,400 single; $311,300 joint). ** First $1,050 of unearned income offset by standard deduction; next $1,050 of unearned income taxed at child’s rate. Amounts over $2,100 of unearned income are taxed at the parent’s rate.