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Term: Kiddie Tax
Definition: The Kiddie Tax is a type of tax that applies to children's unearned income, such as investment income. It is designed to prevent parents from shifting their investment income to their children to take advantage of lower tax rates. Basically, if you're a kid and you make money from investments, you might have to pay some extra taxes on it.
Kiddie tax is a type of tax that is imposed on the unearned income of children under the age of 18. This tax was introduced to prevent parents from transferring their investment income to their children to avoid paying higher taxes.
These examples illustrate how the kiddie tax applies to unearned income that is generated by children. The purpose of this tax is to ensure that parents cannot use their children's lower tax rates to avoid paying higher taxes on their own investment income.