Kiddie tax
Certified Financial Planner glossary · Certified Financial Planner
Definition
Rules that tax a child's unearned income above an exemption amount at parental rates.
Kiddie tax in plain English
A teen's brokerage account throws off dividends and the parents assume the child's low bracket will shelter everything. Kiddie tax rules tax a child's unearned income above an exemption amount at parental rates. Earned wages are treated differently from investment income, and the exemption figure moves with Parameter Lock updates. Stale Law answers recycle last year's threshold. Confirm the current exemption before you compute, and separate earned income from the unearned pile the rule actually targets.
Related Certified Financial Planner terms
Certified Financial Planner practice questions · Certified Financial Planner flashcards · Certified Financial Planner study guide