Kiddie tax for 2008

Source: wsj.com

Under current law, investment income above a certain level (generally $1,700 for 2007) for a child 17 years old or younger typically is subject to the parents' tax rates, assuming the parents' rates are higher than the child's.

That is still the law for this year 2007. Before the law was changed last year, the kiddie tax applied only to children younger than 14.

Under the new law, the age limit will increase (starting next year 2008) to children who are 18 or younger, or under 24 if the child is a full-time student.

However, note that it only applies to children whose earned income does not exceed one-half of the amount of their support.