As the fall season begins, thoughts turn to year-end tax planning. An overlooked area of the tax code is the “kiddie tax.” It generally applies to most unearned income of children under age 19 and of full-time students under age 24 (unless the students provide more than half of their own support from earned income). Such income is generally taxed at the parents’ tax rate. The purpose of the “kiddie tax” is to minimize the ability of parents to significantly reduce their family’s taxes by transferring income-producing assets to their children in lower tax brackets. For 2025, if your child’s unearned income exceeds $2,700, the “kiddie tax” will apply. Contact us for details.
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