Kiddie Tax - Definition

The kiddie tax rule exists in the United States of America which taxes certain unearned income of a child at the parent's marginal Rate, no matter whether the child can be claimed as a dependent on the parent's return. The United States federal income tax system is progressive, meaning, the higher the income the higher percentage of that income is paid to the government in the form of a tax. The progressivity of the income tax system encourages income shifting, which is the shifting of income from individuals in high tax brackets to others in lower tax brackets. If the income exceeds a certain limit, then a portion of it is taxed at the parent's higher tax rate. This investment tax has become known as the kiddie tax.



Terms near "Kiddie Tax"

Kijun line
Kitchen sink bond
Kiwi
Kiwi bond
KMF
Knock for knock
Knock In
Knock Out
Knock-in option
Knock-out option
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