Kiddie Tax
One of the less heralded aspects of the Tax Cuts and Jobs Act (TCJA) was the change in how you calculate the “Tax for Certain Children Who Have Unearned Income”, otherwise known as the Kiddie Tax. This alternative tax calculation was put in place back in 1986 in an effort to prevent wealthy taxpayers from shifting investment assets to their children, where the investment income would be subject to a lower tax rate. This calculation is just one of the many reasons why preparing tax returns for children can often be more complicated and time consuming than you’d think!