Which of the following allows only a small amount of unearned income to be taxed at a child's marginal tax bracket?

Question

Quizplus · Accepted Answer

The Kiddie Tax is designed to prevent parents from avoiding taxes by transferring large amounts of investments to their children, who typically are in a lower tax bracket. It ensures that unearned income above a certain threshold for children under a certain age is taxed at the parents' higher tax rates, rather than the child's lower rates. UGMA and UTMA accounts can be subject to the Kiddie Tax, but they themselves do not dictate the tax treatment of unearned income. A Custodial IRA involves earned income, not unearned income, and has different tax implications.

Which of the Following Allows Only a Small Amount of Unearned