8615 Tax Unethical

[joelgilb]

Just did my first kiddie tax this year and as always I am incensed at how are government can tax a kid, in this case a 19 year old college student that had a measly $4200 capital gain at their parent's rate. So now this kid is taxed almost $600.00. Our politicians ought to be lined up and shot! And I mean ALL OF THEM!

Joel

[AnnieR]

I have one family with 4 dependents, the children were injured in an accident and as a result the settlement is in accounts for them until they are 21. The kiddie tax hits all 4 of them, the youngest was injured the worst and got a larger settlement. That is the one that the tax hits the most.

AnnieR :scratch_head:

[joelgilb]

You just made me think of another one to add to that.

My step-son's step children get military settlement and soc sec because there Captain father was killed in IRAQ defending our country.

Their tax is OBSCENE! is over 1/3 of the money they get to replace their father

Joel

[jainen]

>>Our politicians ought to be lined up and shot! And I mean ALL OF THEM!<<

As an American citizen I object to your suggestion that public servants deserve capital punishment for taking positions you don't agree with. That is simply not how democracy works. In my opinion it is reasonable to require income earned within a family setting, subject to family tax breaks for dependents, be taxed at family rates. If you have a different opinion, you can work through our democracy to change the laws. There is not even an entrenched lobby supporting kiddie tax, so if you can't swing it you should consider how attractive your arguments may be.

[chuck]

Kiddie tax is there for a reason, maybe doesn't seem right in the cases sighted. Doesn't seem fair to me that a drunk can kill you and not go to jail either. We had a senator kill a girl at a bridge and he continued to serve in the senate. Does that seem fair.

[lbbwest]

You just made me think of another one to add to that.

My step-son's step children get military settlement and soc sec because there Captain father was killed in IRAQ defending our country.

Their tax is OBSCENE! is over 1/3 of the money they get to replace their father

Joel

I'm not following the logic, the social security (which comes from tax dollars) is taxed only when there is taxable income beyond a certain limit; so these children must have income beyond the limt. If their dad had lived, his military pay would have been taxed. Dad unfortunately died defending his country. The country then paid his future potential earnings (which would have been taxed) to his surviving children; irregardless of their current financial situation. The government uses tax dollars to make these payments. It's my understanding that survivor's benefits are to help retain the survivor's current financial situation; not to better it. Please clarify my thinking. lbb

[David1980]

I found it terribly unfair when I was attending university that my father's income counted against me getting financial aid. He and his new wife had no interest in providing 1 penny of support but I had to include it anyway, while even another kid with a poor parent might have had more family support than I did, but also qualified for more financial aid.

Taxes are the same. They're not fair. The kiddy tax is one I have less issue with than other stuff at least, I hate EIC and ACTC worse than kiddy tax. And certainly kiddy tax can be very unfair. It's all situation based. Unfortunately without making the tax system subjective there's no real way to tell if that $2000 investment income is the father trying to move his investments into his kids names to avoid tax or if the kid is just unlucky enough to have rich parents that don't care about him or his taxes.

Or how about when you can get EIC with $3000 of rental income but have $3500 of rental income and now you can't. That $500 of income could cost you thousands of dollars.

Taxes just aren't fair.

[Catherine]

Just did my first kiddie tax this year and as always I am incensed at how are government can tax a kid, in this case a 19 year old college student that had a measly $4200 capital gain at their parent's rate. So now this kid is taxed almost $600.00. Our politicians ought to be lined up and shot! And I mean ALL OF THEM!

Joel

I'm with you there, Joel. Although I'll settle for getting ALL their sorry asses voted OUT of office this November. Scum, the lot of them, with one or two honorable folk - exceptions that prove the rule.

[jainen]

>>kiddy tax can be very unfair. It's all situation based.<<

Can we assume you would favor a flat tax, so that everyone pays the same tax regardless of their individual situation?

*******************

>>is the father trying to move his investments into his kids names to avoid tax or if the kid is just unlucky <<

Can we assume you would oppose a flat tax, so that some people pay less tax depending on their individual situation?

*******************

[kcjenkins]

I did not have much problem with Kiddy tax until recently. When it only applied to under 14 it did make a kind of sense, as it impacted basically those who moved income to kids to lower their taxes. But when they moved the age up, it suddenly is hitting a bunch of families that simply set up savings accounts for their kids to save for college expenses, and now, just as they near the age to begin using the money for that purpose, they are hit with these new taxes. But so much of our current tax code is unfair, as well as very overly complicated, that it is hard for me to single out just one of the changes.

[joelgilb]

I did not have much problem with Kiddy tax until recently. When it only applied to under 14 it did make a kind of sense, as it impacted basically those who moved income to kids to lower their taxes. But when they moved the age up, it suddenly is hitting a bunch of families that simply set up savings accounts for their kids to save for college expenses, and now, just as they near the age to begin using the money for that purpose, they are hit with these new taxes. But so much of our current tax code is unfair, as well as very overly complicated, that it is hard for me to single out just one of the changes.

KC,

Guess that is when I first started having major issues with it.

As as for shooting the politicians Jainen, many of them deserve it! Although I must admit I have been always been an ultra liberal and been against capital punishment all my life.

In fact I helped get a bill passed in Morton Grove Il banning hand guns, the first of its kind.

The rest I'll agree with Catherine, they need to go home.

Our politicians no longer care about anything but there pocket book. We vote them in based on promises they make to us, which are all based in LIES LIES LIES. Maybe that's why MA finally put a Republican into office after Teddy died (a great in my opinion). Finally telling this government they are fed up.

The next election, may be when I finally go conservative all the way!

[joelgilb]

I'm not following the logic, the social security (which comes from tax dollars) is taxed only when there is taxable income beyond a certain limit; so these children must have income beyond the limt. If their dad had lived, his military pay would have been taxed. Dad unfortunately died defending his country. The country then paid his future potential earnings (which would have been taxed) to his surviving children; irregardless of their current financial situation. The government uses tax dollars to make these payments. It's my understanding that survivor's benefits are to help retain the survivor's current financial situation; not to better it. Please clarify my thinking. lbb

LBB I think you missed that I also indicated that they get a military settlement and Soc Sec. Most is the military settlement which shows up on a 1099R. Guess my comment on the SS confuesd the post. Sorry for that.

And I am not saying that these kids should not pay tax on the military 1099R, just not at their parents' rate.

[David1980]

Can we assume you would favor a flat tax, so that everyone pays the same tax regardless of their individual situation?

No, I'd prefer a graduated income tax without all the deductions adjustments and credits. Basically the Japan tax system. Yeah, that would probably put me out of business...

[michaelmars]

What most people don't realize is that democracy does not elect the best person, it elects the most average since everyone votes for those that represent their beliefs and not what is best for the country.

As for taxes, i think everyone should pay something otherwise they have no incentive to be prudent and since people elect those that give them "bread & circuses" the more liberal polititians are the most popular with those that do not pay taxes.

i could argue for many systems of taxation but probably the most fair would be a flat percentage like sales tax so everyone pays at the same rate. i know it hurts the poor people but taxes should not be a social program. they should pay like everyone else and other programs could be developed to help them [such as housing subsidies and food stamps etc.]

[cat1]

It would appear that many of the replies fail to understand or are not old enough to remember why this 8515 was enacted. Very simple-gross abuse when tax rates were much higher, putting it in the kiddy's name at a much, much lower rate. Unfortunately the rules for 8515 have not been changed to reflect up to date realities.

[Lion EA]

My kiddie tax families haven't come in yet, so it's not fresh on my mind. But, isn't it only portfolio income that gets taxed at the parents' rate and not earned income? Don't the amounts on W-2s, 1099-Rs, 1099-SSA, etc., get computed in the normal way with only interest, dividends, and capital gains pulled out and calculated as if they'd been on the parents' return? Unearned income over $1,900?

[joelgilb]

As KC said, it wasn't so bad when they istituted it and the age limit was 14. This tax was instituted to stop the abuse of the wealthy, avoiding paying tax by moving their money into lower tax brackets. Trusts, kids etc.

But to raise it to the age limits that they now have has only one agenda, to raise taxes by taxing those that have little or no knowledge and voice. They are simply raising taxes while pretending they are holding the line or reducing taxes. What a surprise, Politicians that lie.

Definitely time for a change, something we might very well get in the next election.

[joanmcq]

If the child is providing more than half his or her support with earned income, the kiddie tax doesn't apply.

[chadw]

I had a student that lost her job and collected unemployment that is now being taxed at her parents rate. Her earned income is not more than 1/2 of her support.

[Lion EA]

In CT, you cannot receive unemployment unless you are physically available for full-time work. That eliminates most traditional students from collecting unemployment benefits. Thank goodness your student gets to eliminate her first $2,400 of unemployment from her taxable income.

A full-time worker going to school part-time, on the other hand, could earn enough (plus student loans, maybe) to provide over half her own support and not be responsible for kiddie tax.