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Kiddie Tax Changes: Tribal Benefits and Alaska Dividends as Earned Income.

This bill changes how the "kiddie tax" is calculated for children's income. It will treat certain payments from Indian tribal governments, Alaska Permanent Fund dividends, and distributions from qualified disability trusts as earned income. This reclassification could lead to a lower tax burden on these specific types of income, potentially leaving more money for families.
Key points
Payments from Indian tribal governments and Alaska Permanent Fund dividends will be considered earned income for kiddie tax purposes.
This change may reduce the tax owed by children receiving these funds, increasing their disposable income.
The new rules apply to tax years beginning after December 31, 2020.
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Additional Information
To amend the Internal Revenue Code of 1986 to treat certain tribal benefits and Alaska Permanent Fund dividends as earned income for purposes of the kiddie tax.
Print number: HR 4783
Sponsor: Rep. Young, Don [R-AK-At Large]
Process start date: 2021-07-28