If you have your own business - either full- or part-time - you have another income-splitting opportunity. Put your children on the payroll, working in the evenings and on weekends during the school year and during the summer. What you pay them is a business deduction for you and earned income for them. That shifts income out of your tax bracket and into the child's. Because it's earned income, the kiddie tax doesn't come into play. In addition, the wages can be used as a basis for IRA contributions for the child, giving the child an early start on saving for retirement.
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