In October 2015, the IRS issued its 2016 tax rate tables and the annual inflation adjustments for 2016 for more than 50 tax provisions (Rev. Proc. 2015-53). The updates include the tax tables for married filing jointly, married filing separately, single and head of household filing status; standard deduction; personal and dependency exemptions; AMT on kiddie tax; […]
For high-income families, a once-popular tax strategy was to shift unearned income to children who were in lower tax brackets than their parents. The IRS closed this loophole in the 1980s by imposing a tax on the unearned income of a child to match their parents’ higher marginal tax bracket. Chapter 8 of Frumkes & Vertz on Divorce Taxation talks about the so-called “kiddie” tax, with strategies and recommendations.
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