Parents of young children will always have plenty to worry about. New tax legislation passed at the end of 2019 eliminates at least one of these worries. The new law repeals a provision that increased the tax a child had to pay on unearned income.

Best of all, these revised "kiddie tax" rules may be claimed retroactive to 2018, when the change initially took effect. It’s as if it never happened!

Many taxpayers purchase mutual funds in their children's names to take advantage of their lower-tax rates.

Changes to the kiddie tax

The Tax Cuts and Jobs Act has changed the way unearned income is taxed for your children.