Comments on: A Sure-Fire Way to Turn your Kids into Tax Free Millionaires http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/ On a Quest for Personal Freedom Sat, 05 Jul 2008 20:02:57 +0000 http://wordpress.org/?v=2.3 By: doug http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-60526 doug Mon, 03 Dec 2007 18:05:33 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-60526 So, if I have 100k in the bank earning 5% per year, I have to pay taxes on 5000 of earned income. If I have two children, my wife and I can give them 10k each for each child, 20k per child per year without going over the gift tax. So, my infant children can earn 850 per year in '07 tax free and 850 per year additionaly at a much lower tax rate than what I'd have to pay. At an age of about 13, I could have my kids give us a 12k gift (current cash tax free gift amount) per year back to me. Thus, I'd have went for at least 10+ years with my 2 kids getting me 3400 woth of income at a very low tax rate? Can anyone confirm if this is correct? I think it is. Now, I'd just have to set up a UGMA for my children so they don't take the money when they are 12! So, if I have 100k in the bank earning 5% per year, I have to pay taxes on 5000 of earned income.
If I have two children, my wife and I can give them 10k each for each child, 20k per child per year without going over the gift tax.
So, my infant children can earn 850 per year in ‘07 tax free and 850 per year additionaly at a much lower tax rate than what I’d have to pay.
At an age of about 13, I could have my kids give us a 12k gift (current cash tax free gift amount) per year back to me. Thus, I’d have went for at least 10+ years with my 2 kids getting me 3400 woth of income at a very low tax rate? Can anyone confirm if this is correct? I think it is. Now, I’d just have to set up a UGMA for my children so they don’t take the money when they are 12!

]]> By: Randy http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-60228 Randy Sun, 02 Dec 2007 06:32:54 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-60228 Hi Steve, Well, it would be my child's LLC and it would be a single member LLC which would be treated as a sole proprietorship for tax purposes anyway. Just wondering if that would allow my child to then take the gains as self employment income as she would run the company. Hi Steve,

Well, it would be my child’s LLC and it would be a single member LLC which would be treated as a sole proprietorship for tax purposes anyway. Just wondering if that would allow my child to then take the gains as self employment income as she would run the company.

]]> By: Steve http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-59335 Steve Wed, 28 Nov 2007 20:50:12 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-59335 Randy, Don't use an LLC. This is only legal with a sole proprietorship. And be sure to check with your accountant and attorney before you do anything. Some situations can be different than the one above. Randy,
Don’t use an LLC. This is only legal with a sole proprietorship. And be sure to check with your accountant and attorney before you do anything. Some situations can be different than the one above.

]]> By: Randy http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-59160 Randy Wed, 28 Nov 2007 08:02:50 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-59160 Very interesting post. I wonder if anyone has any input to this idea. Say my child sets up an LLC and the purpose of that LLC is stock trading. Not investing but trading. So the LLC generates a K1 and that get put on his/her tax return. Do you think that would be treated as self employment income and thus avoid the kiddie tax? Very interesting post. I wonder if anyone has any input to this idea. Say my child sets up an LLC and the purpose of that LLC is stock trading. Not investing but trading. So the LLC generates a K1 and that get put on his/her tax return. Do you think that would be treated as self employment income and thus avoid the kiddie tax?

]]> By: Poorer Than You » Get $10 for Amazon.com and Cook by the Numbers: Lazy Sunday http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-46555 Poorer Than You » Get $10 for Amazon.com and Cook by the Numbers: Lazy Sunday Sun, 07 Oct 2007 14:50:52 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-46555 [...] here’s a sure-fire way to turn your kids into tax-free millionaires. Just do me a favor if you do this - teach them financial responsibility as well, so that instead [...] […] here’s a sure-fire way to turn your kids into tax-free millionaires. Just do me a favor if you do this - teach them financial responsibility as well, so that instead […]

]]> By: Theresa http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-38066 Theresa Sun, 26 Aug 2007 02:06:34 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-38066 And forgive all the grammar problems of my previous post LOL! And forgive all the grammar problems of my previous post LOL!

]]> By: Theresa http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-38065 Theresa Sun, 26 Aug 2007 02:05:36 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-38065 Hi Steve! Following your front page thread on the year in review, and see your link to how people reacted brought me here. I had no clue about any of this... I mean I knew certainly that my son could be an employee of the company, but I had no idea I could help make him money-worry-free in the process. He's 16 now, and I wish I'd see this 10 years ago! Not only would he be taken care of, but he'd be able to take care of his loving mother :), too! Never to late to start?? Hi Steve!

Following your front page thread on the year in review, and see your link to how people reacted brought me here.

I had no clue about any of this… I mean I knew certainly that my son could be an employee of the company, but I had no idea I could help make him money-worry-free in the process. He’s 16 now, and I wish I’d see this 10 years ago! Not only would he be taken care of, but he’d be able to take care of his loving mother :), too!

Never to late to start??

]]> By: Steve http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-36679 Steve Sun, 19 Aug 2007 18:10:16 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-36679 Here is a link to some info in the Kiddie Tax on "unearned income": <a href="http://www.april15.com/kiddie.pdf">Kiddie Tax</a> This clearly explains what "BS" mentions. What "BS" doesn't know is that "earned income" is treated very differently. Here is a link to some info in the Kiddie Tax on “unearned income”:

Kiddie Tax

This clearly explains what “BS” mentions. What “BS” doesn’t know is that “earned income” is treated very differently.

]]> By: Steve http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-36678 Steve Sun, 19 Aug 2007 17:59:48 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-36678 From april15.com: Reducing Income Taxes. Usually, children (especially minors) are subject to lower tax rates than their parents. In this case, shifting taxable income away from the parents and to their children is an effective way to lower the family's tax burden. Many income-shifting strategies were effectively killed by the "kiddie tax," which taxes the unearned income of children under age 14 at their parent's marginal rate. Fortunately, wages are earned income, so they are not subject to the kiddie tax. Also, children who are claimed as their parent's dependents usually are limited to a standard deduction of $750 (for 2003). However, the standard deduction for a dependent with earned income equals his or her earned income plus $250 (up to $4,750 for 2003). Thus, up to $4,750 of earned income can be completely sheltered from tax. And, the next $7,000 of wages will be taxed at only 10%. From april15.com:

Reducing Income Taxes. Usually, children (especially minors) are subject to lower tax rates than their parents. In this case, shifting taxable income away from the parents and to their children is an effective way to lower the family’s tax burden. Many income-shifting strategies were effectively killed by the “kiddie tax,” which taxes the unearned income of children under age 14 at their parent’s marginal rate. Fortunately, wages are earned income, so they are not subject to the kiddie tax. Also, children who are claimed as their parent’s dependents usually are limited to a standard deduction of $750 (for 2003). However, the standard deduction for a dependent with earned income equals his or her earned income plus $250 (up to $4,750 for 2003). Thus, up to $4,750 of earned income can be completely sheltered from tax. And, the next $7,000 of wages will be taxed at only 10%.

]]> By: The Double Zero » Blog Archive » Turn your kids into tax-free millionaires! http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-36675 The Double Zero » Blog Archive » Turn your kids into tax-free millionaires! Sun, 19 Aug 2007 17:41:10 +0000 http://www.steve-olson.com/a-sure-fire-way-to-turn-your-kids-into-tax-free-millionaires/#comment-36675 [...] I came across a great article for those of you with or about to have kids. You can easily provide them with a couple of million dollars for their retirementby following a couple of steps. Now this might not be entirely feasible for everyone as it involves starting a business and hiring your child as an employee, BUT! If you can start even a small business and afford to pay your children the benefits will be obvious. [...] […] I came across a great article for those of you with or about to have kids. You can easily provide them with a couple of million dollars for their retirementby following a couple of steps. Now this might not be entirely feasible for everyone as it involves starting a business and hiring your child as an employee, BUT! If you can start even a small business and afford to pay your children the benefits will be obvious. […]

]]>