How does the kiddie tax work?

disneysteve · #1 (**permalink**) 01-26-2007, 09:10 PM

What are the rules for taxes on interest earned by minors? Is there a certain amount they can earn and not need to file a tax return? Or do they have to file no matter what? I know I can look this up at IRS, but I figured it was easier to ask you guys.

PRICEPLUS · #2 (**permalink**) 01-26-2007, 11:24 PM

I have the same issue with my daughter. I am going to have to look it up.

sweeps · #3 (**permalink**) 01-27-2007, 06:04 AM

The first $850 is exempt from taxes. The next $850 is at the child's tax rate (10% probably). Then anything after that is at your highest rate. Until the child turns 18.

disneysteve · #4 (**permalink**) 01-27-2007, 08:20 AM

Quote:

Originally Posted by Sweepsplayer

The first $850 is exempt from taxes.

Does that mean you don't need to file a return?

sweeps · #5 (**permalink**) 01-27-2007, 11:10 AM

Correct. Filing test for dependents

disneysteve · #6 (**permalink**) 01-27-2007, 12:33 PM

Thank you.

PRICEPLUS · #7 (**permalink**) 01-27-2007, 06:09 PM

Ditto!