Smart Kiddies Duck Tax

July 24, 2013Article

Fearful that prosperous families might skirt progressive income taxes, Congress in 1986 imposed a "kiddie tax" throwing the investment income of youngsters into their parents' higher income tax bracket. The tax used to stop at age 14. Now it dogs the little tykes until they turn 24, if they are in school. Is there a way to avoid it?

To answer this question we turned to a lawyer from California, a state where progressivism is so long entrenched that the upper crust has evolved defensive mechanisms. Laura Zwicker, who helps families deal with knotty tax issues, has a creative end run around the kiddie tax that works for college students.