Kiddie Tax Form 8615 – Killer Explanation
The strategy of shifting income from higher tax brackets (tax rates) to lower tax brackets allow many taxpayers to reduce their tax liability. You may be able to save taxes transferring income to your children or other family members that you are supporting financially.
Kiddie Tax Form 8615 – Eligibility
The IRS imposed new rules concerning income shifting within the family.The kiddie tax is available only for an unearned income child, who receives income-producing property (including cash, stocks, bonds, mutual funds, real estate, etc.). Wages, salaries or professional fees for services rendered are not included.The kiddie tax applies only if:
- Your child is under age 19, unless his earned income is more than half his support.
- Your child is a full-time student, unless his earned income is more than half his support. In this case, the kiddie tax applies up to age 24. In order to qualify, he must attend school full time for at least five months during the year.
Parents can elect to claim a child’s income if the child is not married, and does not file a joint return.
Kiddie Tax Limits
The kiddie tax applies as is follows:
- The first $950 of unearned income is tax-free.
- The next $950 of unearned income is taxed at the child’s tax bracket.
- The amount that exceeds $1.900 of unearned income will be taxed to the child at the parent’s tax rate.
If you choose to claim your child’s income on your tax return, you need to attach Form 8814 with your tax returns.You must file Kiddie Tax Form 8615 for your child tax return, if you do not qualify to claim their income on your tax return. Certain rules apply when filing your tax return for your child.As advice, you may transfer investments that increase in value overtime which do not generate taxable income until they are sold. These investments include: treasury bills, municipal bonds, U.S saving bonds, tax managed mutual funds, etc.Here at Joe Mastriano P.C., we understand the entire IRS process and what it takes to get your problem resolved. We’ve been in business now for over 30 years and have the experiences you need to make sure we get your debt reduced as low as possible. Do yourself a favor and visit our website. If you like what you read and want to talk to a specialist, call us today at (713)774-4467