Q&A: Figuring out when the "kiddie" tax applies to your family

September 4, 2009
David J. Schiller, JD
David J. Schiller, JD

The author is a Norristown, PA tax and estate-planning specialist, and an editorial consultant to this magazine.

My daughter is a 19-year-old, part-time student in college. Are we subject to "kiddie tax"?

A: The so-called "kiddie tax" was created to cut out a tax loophole in which parents could give stock or other investments as gifts to their children to take advantage of their children's lower tax rates. The rules recently changed, and full-time students under age 24 are now subject to the kiddie tax, but part-time students are exempt. Therefore, your daughter's income is taxed based solely upon her own tax return since she is part time.