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Understanding Tax Terms: the kiddie tax – What you know can help you

In 1986, a tax law was introduced to block parents from transferring investments to their children as a technique to lower their taxes. This law, commonly known as the kiddie tax, ensures that this unearned income is taxed at a parent’s, usually higher, tax rate. But there is still a tax planning opportunity. The term “kiddie tax” was introduced by the Tax Reform Act of 1986. The IRS introduced this …Read More