Re: Kiddie tax
- From: kamlet@xxxxxxxxx (Arthur Kamlet)
- Date: Wed, 5 Sep 2007 20:42:16 +0000 (UTC)
In article <1189021948.541890.286030@xxxxxxxxxxxxxxxxxxxxxxxxxxxx>,
researcher <malibu.ron@xxxxxxxxxxx> wrote:
We opened a UGMA account at a stock brokerage house for a our 9 year
old grandson 3 years ago. He has a capital gains on his stocks and we
would like to sell it and reinvest in something else. My
understanding is a 9 year old full time student is subject to a
maximum 5% (Kiddie Tax) capital gains tax rate. Is this correct.
It depends.
Let's assume the child has no earned income and only has
long-term capital gains income from selling stock.
The first $850 is not taxed at all. So the rate for that is zero.
The next $850 is taxed at 5% and soon that is scheduled to drop
to 0%. So for this year, anyway, the rate is 5%.
And any amounts above that are subject to kiddie tax, which moved
to anyone under age 18 last year and in 2008 moves
to even older children. The kiddie tax makes additional l-t capital
gains subject to the higher of the kid's or the parent's tax rate,
which is often 15%.
Some folks wish to include the child's unearned income
on their own tax return, though this will not help, and
cannot be done when there are long term capital gains from
sale of stock.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
.
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