Strategy: Put your teenager on the payroll. That can have an immediate impact on your family’s 2006 taxes. And, if your child continues working in this capacity, he or she will be eligible for other benefits.
In fact, this strategy makes even more sense if you’re facing unanticipated “kiddie tax” problems this year.
Here’s the whole story: To the extent that the unearned income a child receives exceeds an annual threshold ($1,700 for 2006), the excess is taxed at parents’ top tax rate. So, your family may be penalized if you’ve set aside funds in your child’s name to pay for college or other expenses.
Prior to this year, this harsh tax rule applied only to children under age 14. Under a new tax law change, the kiddie tax now extends to children under age 18. In other words, the kiddie tax applies for four more years of ...(register to read more)