Kram BergGold has already started a thread related to the changes in the kiddie tax rules, but I would like some advice from a slightly different perspective.
Excerpt is from a recent NY Times article: "The new law raises the applicable age to under 19, or to under 24 for students who do not earn enough to provide more than half of their own support."
I thought it was bad enough when things went from under age 14 (thought I was finished with that!) to under 18. Under 19 is another twist of the knife, but the "under 24 for students etc" really bothers me.
I assume there are MANY parents who still legitimately claim their children as dependents throughout their college years. Many/most of those college-age students are working summer or part-time jobs during school and have income tax returns to file. With this "improved" kiddie tax hanging over their heads (yes, I realize there is a fairly high floor for investment income) it is quite possible that a large number of tax returns for dependents will now be delayed until the parents' own tax returns can be finalized. Such roadblocks could easily prevent the students from filing their own tax returns until late in the tax season and, in many cases, even later due to extended tax return filing for their parents who have unusual or complicated tax returns.
It is also a reasonable assumption that numerous parents/students will have been selling stocks to generate college funds, and the profit from such sales alone can soon easily bring on the new "improved" kiddie tax.
My own child has stock funds that have been growing over the years, and those funds were specifically intended for college purposes. I now wonder if it might not be better to dispose of those funds soon (NO kiddie tax) versus post 1/1/08 (new kiddie tax applies assuming I'm reading things correctly).
Any board members input will be appreciated. Aside from my personal involvement in this issue, I can also foresee many of my own clients (and their dependents!) who will not be terribly pleased with the inconveniences of dealing with Form 8615.
FE
Excerpt is from a recent NY Times article: "The new law raises the applicable age to under 19, or to under 24 for students who do not earn enough to provide more than half of their own support."
I thought it was bad enough when things went from under age 14 (thought I was finished with that!) to under 18. Under 19 is another twist of the knife, but the "under 24 for students etc" really bothers me.
I assume there are MANY parents who still legitimately claim their children as dependents throughout their college years. Many/most of those college-age students are working summer or part-time jobs during school and have income tax returns to file. With this "improved" kiddie tax hanging over their heads (yes, I realize there is a fairly high floor for investment income) it is quite possible that a large number of tax returns for dependents will now be delayed until the parents' own tax returns can be finalized. Such roadblocks could easily prevent the students from filing their own tax returns until late in the tax season and, in many cases, even later due to extended tax return filing for their parents who have unusual or complicated tax returns.
It is also a reasonable assumption that numerous parents/students will have been selling stocks to generate college funds, and the profit from such sales alone can soon easily bring on the new "improved" kiddie tax.
My own child has stock funds that have been growing over the years, and those funds were specifically intended for college purposes. I now wonder if it might not be better to dispose of those funds soon (NO kiddie tax) versus post 1/1/08 (new kiddie tax applies assuming I'm reading things correctly).
Any board members input will be appreciated. Aside from my personal involvement in this issue, I can also foresee many of my own clients (and their dependents!) who will not be terribly pleased with the inconveniences of dealing with Form 8615.
FE
), here is a nice article from IBD:
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