Income shifting USA style

Income shifting USA style

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Quote from a US investment site:

New in 2008, the kiddie tax -- the rule that children's investment income is taxed at their parents' rate -- applies to more children. Before, it applied to children through age 17, but now it applies to people through age 18 or through age 23 for full-time students.
"That means (children's) unearned income in excess of $1,800 would be taxed as though it was earned by the parent," Scharin said. "It's really geared at preventing families shifting income" to their children to benefit from the kids' lower tax bracket.

"That could have been an impetus for raising the kiddie tax age -- to prevent those younger people from benefiting from the 0% capital-gains rate," Scharin said.

Watch the 2009 Budget!!!

AE

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By Paul Soper
25th Apr 2008 19:39

So new so nu!
We have taxed parents on the income derived from capital provided to children since 1969 where it exceeds £100 pa - and that limit has not increased since then so it becomes more and more likely that trivial savings by parents on behalf of children should get caught in the way. How many parents declare it? On any investigation it could be a ticking time bomb. If adjusted for the effect of inflation that should be over £1,000 of income equating to parental saving of (say) £25,000 rather than the paltry effective limit of £2,500 assuming a 4% yield

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