Your Tax Question - 008

Dear John, My son (whose name is also John btw) is 17 years old and he just sold a stock that made him quite a bit of money. The gain was placed in a 529 IRA for college. How will this affect my taxes? Sincerely, Betty.
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Hi Betty,

I need some investing tips from your son. ;-)

On the face of it, it appears that your son will have to file and claim his gain as income and pay your top marginal rate. This is due to what is known as the ‘Kiddie Tax’. Unfortunately, high income wage earners were transferring gains into their children’s names and paying the taxes due at the child’s lower tax rate. The IRS got wise and viola! The ‘Kiddie Tax’ is here. Be sure to check with your paid tax expert for more detail.

Hope this helps,
John

PS. There is still room on my client list for you. Email me