Can your clients put their teenagers on the payroll? Preferring earned income to unearned for their children is just one way parents are paying closer attention to how much and what kind of dollars flow to their offspring. Before the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), earnings didn't enter the picture as often, since only children under 14 were subject to the "kiddie tax"—having to use their parents' tax rate to compute their tax liability for net unearned income. Under TIPRA, the kiddie tax applies to children under 18 for tax years beginning after 2005, so many more taxpayers must now consider it.
展开▼