What to Know About the Kiddie Tax

IN 1986, A LAW WAS passed that prevented parents from shielding money from taxes by transferring investments to their children's names. Before then, the children's investments were taxed at the child's low rate, and some wealthy parents would move investments to their children specifically to reduce their own tax liability. The "kiddie tax" law changed the rules. In the first version of this law, which took effect in 1987, most investment income for children under age 14 was taxed at the parents
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