TAXATION OF CHILDREN'S SEPARATE INCOME - "KIDDIE TAX" - APPLIES TO :

• Children under 18 Unearned income (other than W-2 Income) under 18 is taxed at Parent's income tax rates if the Child's net unearned income exceeds $1,900

• Children who are 18......And the Child's earned income is less than half of the child's support cost. They are taxed at Parent's income tax rates.

• Children who are full time student under 24 or over......if the Child's earned income is half or less of the Child's support cost. They are taxed at Parent's income tax rates.

TAX PLANNING TIPS

• TRANSFER APPRECIATED ASSETS TO CHILDRENWHO ARE NOT SUBJECT TO "KIDDIE TAX." Savings can be dramatic! Ask for more details. Their sale of stocks will be substantially less than at your tax rates!! Possibly even $-0-

• CONSIDER HIRING YOUR CHILD if you have your own business. You can deduct the wages you pay and the income will probably be at lower rates. It may not taxed at all if their W-2 income is below their standard deduction of $4,700. They can take out an IRA and shelter an additional $3,000. As long as you provide over 50% of their "support" you can still take them as a dependent. They will need a W-2 from your business, and have special treatment for Payroll taxes. But, you have to assign them jobs that they really perform that don't break any child labor laws, etc.

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