In today's episode, our resident tax planning expert Annie dives into the topic of "Kiddie Tax." Kiddie tax is a special set of income tax rules that apply to individuals under 18 years and full-time students under 24 years. If the child’s unearned income (investment income) is more than the kiddie tax threshold for the tax year, then the child’s unearned income over the threshold is subject to the kiddie tax and gets taxed at the parents’ marginal tax rate rather than the child’s tax rate. The kiddie tax threshold is adjusted for inflation each year.

What is the kiddie tax threshold? Adjusted each your for inflation, the 2021 threshold is $2,200 and the 2022 threshold increases to $2,300.

If you'd like to learn more about this and other tax planning strategies, please consult your tax planning professional - and if you are in need of a tax planning expert, reach out to Annie to schedule a no-cost, no-obligation consultation here.