Tax Rates for a Child's Investment Income

Tax Rates for a Child's Investment Income: "Part or all of a child's investment income may be taxed at the parent's rate rather than the child's rate. Because a parent's taxable income is usually higher than a child's income, the parent's top tax rate will often be higher as well. This special method of figuring the federal income tax only applies to children who are under the age of 14. For 2005, it applies if the child's total investment income for the year was more than $1,600. Investment income includes interest, dividends, capital gains, and other unearned income."