The kiddie tax generally applies to the unearned income above $2,100 received by a child in 2018 under age 19 or a full-time student under age 24. The excess is taxable at the parents’ top tax rate.
Alert: Under the new law, the kiddie tax is based on the tax rates and brackets for estates and trusts. This is a fundamental change in the tax calculation.
The Tax Cuts and Jobs Act (TCJA) replaces the five-rate estates and trust tax structure with four rates of 10%, 24%, 35% and 37%.
Tip: Because of the compressed rates for estates and trusts, it may be more likely that kiddie tax income will be taxed at the top tax rate.
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