Question

A child who has unearned income of $2,200 or less may still be subject to the kiddie tax.

1) True
2) False

Answer 1

True, the kiddie tax can apply to a child who has unearned income of $2,200 or less, with taxes being assessed at the parents' marginal tax rate.

Step-by-step explanation:

The statement that a child who has unearned income of $2,200 or less may still be subject to the kiddie tax is true. The kiddie tax is designed to prevent parents from avoiding taxes by shifting large amounts of investment income to their children, who typically are taxed at a lower rate. Children under certain age thresholds with unearned income above a certain amount must pay taxes on that income at their parents' marginal tax rate. As tax laws are subject to change, it's important to consult current tax guidelines or a tax professional for the most accurate information.