I know the hijack is more or less resolved, but I don’t think this is quite the case.
I remember the tax rates for my first after-school jobs, and I got taxed more or less as if I were in my (very low) income bracket. I remember making about $3500 the first year and coming out taxed at something like 5% after taking standard deduction, even though that technically put me at ‘no income’. I believe you get taxed more if you’re a dependent, but not as much as you’re suggesting. My parents are pretty comfortable, so if my income were considered part of theirs, I wouldn’t have any deductions and the rate would have been much, much higher.
Congrats to miss elizabeth’s daughter in any case, for her good fortune and good sense.
The tax laws changed a while back. My children both had hefty saving accounts (gift from their grandfather). Each year until they were 16(?) They had to file a tax return, where they were taxed at the exact same rate as I was. To the tax man it did not matter that that $1,200 in interest was in their name, it was taxed as if it was an additional $1,200 in my name. My CPA told me this was to prevent the very rich from gifting a zillion dollars to a child that had no income and not having to pay as much tax.
When they hit the cut off age (16 IIRC) they were then taxed as if this was their only income (it was), this resulted in a huge reduction in what I had to pay each April.
In the case of the OP, I doubt anything will come of this. If the OP did not give a SS # then there will be no 1099 issued.
Okay, one more link because this is getting interesting, and then I will stop hijacking. I did some googling around and it looks like it falls somewhere in between our two examples (I’m 23 and my first tax filings weren’t all that long ago, so I may be wrong on the situation for your children). It looks like unearned income (interest, trust funds, contest winnings, etc) is taxed at the parent’s marginal tax rate (as in your children’s cases), but earned income (after-school work, work-study, etc, as in mine) is taxable more or less the way I described it.
The site I linked is dated from 2000 (about the time I was starting to file anyways), but it’s probably close enough for the sake of argument.
Oh, I harbor no illusions about why she wants us to come to her stable. I mean, I’m sure she’s a nice woman, who genuinely loves horses and wants to share that, but she’s also a businesswoman.
It’s okay though. If it makes her happy, I’m not against lessons, or even buying her a horse (or pony). But I think she needs to show a sustained interest before I take on that kind of burden. In other words, this really wasn’t the right time for it. It was a really neat thing to have happened, though. I know she’ll remember it for a long time. I never won anything when I was a kid! And I’m really glad it didn’t end up breaking her heart. She’s a shrewd girl though; I think she feels like she came out ahead.
Exactly right. If she’s got the horsemania, she’ll sustain the interest past the My Little Pony stage rather than growing out of it into other bestest things evah. Four is really too young, physically and concentrationwise, for most kids to do much more than pony rides, anyway – although we have one little girl at our barn who started lessons around that age and has done quite well; but it was apparent from the first time she got on a horse that she was a natural.
So yeh, lessons as she grows up, if she enjoys them (how to pick a kid’s instructor is a whole nother topic), and see how it goes.
It was really funny to watch when I let a little girl who adores him use him for a game of redlight during one summer day camp at our barn. This is a horse who used to gallop cross-country leaping great logs and stone walls as a field hunter in his younger days, but he’s so laidback the kid had more trouble getting him to go forward than to back up.
