Ken: Hi everybody, how are you doing? I want to talk a little bit about taxes oh goody, goody. But now listen. I'm going to make this a short video because let me tell you why. The kiddie tax, the new kiddie tax for 2008 is a little complicated so by the next two minutes. If I can at least alert you that the situation is changed, you’ll go in the internet and learn more on Dolans.com. You can learn more and you’re sure once you talk to your tax adviser about how the kiddie tax may affect you. All right, two minute course.
In years passed, parents could shift assets to their child interest earning asset to their child. Get it out of their high taxed bracket and put it into the kids low tax bracket. It’s called income shifting. Great idea, tremendous idea, congress figure that popping out. They’re thinking wait a second, we’re losing a lot of taxes because parents are shifting assets that’s earning money that they will ordinarily be tax at their rate as now at the kids rate so that’s the end of that.
As of 2008, the kiddie tax can potentially apply to your child until your child turns 24. Kiddie tax does not apply to anybody over the age of 24 generally speaking and only applies to somebody between 19 and 23 if there’s a student. Here is the kiddie tax. If a child, if assets on the child’s name earned have under the income which is like stock dividends stuff. We’re not talking about
going out working. We’re talking unearned income that exceed $1800.00 in the year 2008, and then guess what? Anything over that is back to the parent’s tax rate $1800.00 being the magic number.
Now, also in some income shifting it may make some sense but the key thing is that it depends in your particular situation. The key number is $1800.00 in unearned income and then back it goes back to the parent’s rate. 17 or younger, it’s still $1800.00 or more the $1800.00 dollars, anything above that threshold of tax that the parents rate whether that person on the 17 is at dependent or not.
So let it suffice to say. All I'm trying to get across to you in this two minutes or three minutes here is the fact Hey parents, there is a new kiddie tax be sure to be aware of it before you start shifting income to the kids making hundred as $1800.00 its not bad when you call it unearned income that’s a fair amount of money” considering you know some small dividends and stocks. And as I said, some income shifting may make sense—may. The bottom line is be aware of the new kiddie tax rules. Be aware that there are new kiddie tax rules and talk with the tax adviser to see how it affects you and your kids. Kiddie tax is not just for kids. Check it out!
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