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Financial Planning / Tax Strategies


Subject:  Kiddie Tax and Capital Gains Date:  11/10/1998  1:01 PM
Author:  gteton Number:  6208 of 127515

If a child under the age of 14 has unearned income greater than $1,400.00 then the "kiddie tax" kicks in. Question is, If the majority of the income is a result of capital gains, that amount is taxed at the parents capital gains rate, not at the parents marginal rate. Is this correct? Assume these gains are from investments held greater than 18 months and the parents are in the 28% bracket then the tax would be 20% of the gains, not the 28% marginal rate nor the 10% rate that the child would have had on a capital gain if age 14. Again is this correct?

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