Permalink Submitted by Peter Lingane on Thu, 2012-03-08 03:56
Pub 17 (2011, p. 213) defines the investment income of a child as, essentially, anything other than wages. Thus it seems reasonable to conclude that a distribution from an inherited IRA would be “investment income.”
If a child’s investment income exceeds $1900, it is taxed at the parents’ marginal tax rate.
So, the first $1900 of the distribution from an inherited IRA is probably taxed at the child’s rate and everything above $1900 is taxed at the parents’ rate.
A child for federal income tax purposes may or may not be a “minor.”
Permalink Submitted by Peter Lingane on Thu, 2012-03-08 03:56
Pub 17 (2011, p. 213) defines the investment income of a child as, essentially, anything other than wages. Thus it seems reasonable to conclude that a distribution from an inherited IRA would be “investment income.”
If a child’s investment income exceeds $1900, it is taxed at the parents’ marginal tax rate.
So, the first $1900 of the distribution from an inherited IRA is probably taxed at the child’s rate and everything above $1900 is taxed at the parents’ rate.
A child for federal income tax purposes may or may not be a “minor.”