I have a Philips here. I want to talk to you for two seconds about something called the kitty tax. Now, most people don't worry about the kitty tax, but it's kind of a hideous tax on children. It's intended to get the rich to pay their fair share, you know how that one is. Well, what happens is one of the three tax techniques is shifting income. The other two are postponing the income or changing the nature of the income. Basically, all tax planning is based on one of those three concepts. Shifting income is where a person earns the income and then somebody else pays the tax on it. The way shifting income works is daddy the doctor sets up a company, puts all of their equipment into the company, or the backhoe owner of the little business puts his backhoe into the company. And then, the children on the company, the operating company, rent the backhoe or rent the medical equipment, and they pay rent. Well, who gets the rent? The owners of the company who own the backhoe or who own the medical equipment. The kids, they get the money. It's not earned income, it's passive income, and that's a very important concept. So passive income goes down to the children. We've now taken money from Daddy. He earned it, transferred it to rent, moved it to the children. We've shifted it to the kids, and the kid pays tax on it. Or Daddy just gave the kid a million dollars in IBM stock, and the kid gets a big dividend every year. IBM pays dividend or not, but the kid gets a big dividend every year and makes money that would have been money that if Dad had kept the IBM stock, Dad would...
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8615 Form: What You Should Know
Under the Child Tax Credit, the child's earned income can't exceed the combined earned income of the parent and child. For more information on the Child Tax Credit, see IRS Publication 547, Child Tax Credit and Reconciliation Rules. See tax basics/ChildTaxCredit.htm. The Child Tax Exemption (CTE) applies if your earned income is greater than your child's earned income. Both parents need to have the same earned income if the parent's earned income is less than the child's earned income. Form 8615 Form 8615 is used to calculate your tax on certain children's unearned income. Unearned Income: A Child's Unearned Income is income that is not paid in cash, but in some cases can be counted as earned income by subtracting certain expenses (such as those paid as a down payment) from a taxable income. Unearned income includes, among other things:  child care expenses (such as school lunches and child care expenses under Medicaid) student loan interest paid gifts and inheritances from a deceased parent unearned income earned by dependent children child and dependent care expenses paid by a federal or state agency, including social security and the Children's Health Insurance Program (CHIP) unearned income earned by a disabled child unearned income earned by an unmarried dependent child of the child's parent, and child care expenses if the child has an “undue hardship” or “exceptional need” for care as determined by a state licensing board. The Child Tax Credit (CTC) only applies to unearned income from work experience. It is not available to child care expenses paid by your employer or a tax on a child's medical expenses unless the child is in your home. Form 8606 — Income Tax Statement smart Tax You may receive tax statements by completing the smart tax Return Form 8606, which is used to report income on Form 1040, or the 1040A, 1040EZ or 1040A Tax Statement and Form 1040 Form 1040A Individual Filing Status Income Tax Return.
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