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TaxWatch: The ‘kiddie tax’ is getting easier (and maybe cheaper) under the new tax law

A child who is considered a dependent on either or both of the parents’ tax return may still need to file a federal income-tax return depending on the type (earned or unearned) and amount of taxable income.

Fortunately, the new tax law treats a child’s unearned income (interest, dividends and capital gains) more favorably beginning with the 2018 tax year.

But don’t be misled: The tax on a child’s income is still a complex area that should not be taken lightly. Here’s what you need to know.

Who is a dependent child?

Children fall into three categories in the eyes of the Internal Revenue Code: under age 18 at the end of the year; 18 at the end of the year but didn’t have earned income equal to more than half of their support; or between 19 and 23 at the end of the year, didn’t have earned income that was more than half of their own support and were full-time students.

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