June 2004 Newsletter continued

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Bulletin Board  | Federal & State Tax Forms

This newsletter offers factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects.  No party assumes liability for any loss or damage resulting from reliance or use of this material.

5. favorable tax results will be achieved if the parent with a lower marginal tax rate has custody of the child. Note that if the custodial parent files a joint return with a spouse who is not a parent of the child, the total taxable income shown on the joint return is used to determine the parent’s taxable income for purposes of the kiddie tax.
6. Hire children as employees of the parent’s business, paying generous but defensible rates of pay. Not only will the child receive earned rather than unearned income, the business may claim a deduction for reasonable compensation paid to the child. Buy coupon bonds and transfer them by age groups, giving younger     children coupons that will mature after they reach age 14. The donor     must transfer the corpus of the bond at the same time the coupon is     transferred in order to avoid the application of the assignment of income doctrine.

• 2nd quarter individual & corporate estimated tax payment due 6-15-2004.