Do you pay the kiddie tax?

The kiddie tax is a tax rule is levied on capital income (interest, dividends and capital gains) earned by children under 19 and students full time under 24. in 2016, the total income of the child's assets beyond $ 2,100 is taxed at the tax rate of the parent company.

in 2016, the only way that students under 24 years old will be able to avoid the kiddie tax is if they provide more than half of their own support their own earned income (ie . to wages and salaries, not the income from the sale of stocks) in this case, the child's unearned income would be based on the child's tax rates, not rates relatives under tax rules for children.

So, is there a way to avoid paying this tax? Yes, there are several ways, including using 529 plans and life insurance. Life insurance you say? Yes, and it works well.

Permanent life insurance allows you to store funds in the cash value of the policy, which accumulate tax deferred until they are withdrawn or borrowed to politics. The rate of return over 15 to 20 years may be better than others safe money market equivalents such as CDs and money markets and there is no taxation in progress.

Want to know more? Contact your agent or financial advisor for details.