Listen to a Business English Dialogue About Kiddie tax
Charles: Hey, Orla, have you heard about the kiddie tax?
Orla: Yes, it’s a tax rule that affects children’s investment income.
Charles: Right. It was changed recently, now children’s unearned income above a certain amount is taxed at the parents’ rate.
Orla: That’s correct. It’s meant to prevent parents from shifting their investment income to their children to lower their tax bill.
Charles: Exactly. It applies to children under a certain age, usually under 18, or under 24 if they’re full-time students.
Orla: Yes, and it can affect children who have more than a certain amount of unearned income, like from stocks or bonds.
Charles: It’s important for parents to understand how it works to avoid unexpected tax liabilities.
Orla: Absolutely. Planning ahead and knowing the rules can help families manage their finances more effectively.
Charles: Have you seen any changes in how families are managing their investments because of the kiddie tax?
Orla: Some families are now considering different investment strategies to minimize the impact of the kiddie tax.
Charles: That makes sense. It’s always important to stay informed about tax laws and how they affect your finances.
Orla: Definitely. Being proactive can help families navigate these changes more smoothly.