The surprising tax bill for sons and daughters of Gold Star families
Rebecca Headings’s husband, U.S. Navy Senior Chief Petty Officer Gary Headings, died of a heart attack at age 39 in 2017.
After Mr. Headings’s death, his son began getting an annual survivor’s benefit paid to many families who have lost active-duty service members—often called Gold Star families. Last year, that benefit was about $29,300.
But his son, age 6, owed nearly $7,000 in federal taxes on it.
“At first I was stunned, and then angry. My child’s tax rate is higher than mine,” says Ms. Headings, a social worker in Virginia Beach.
Ms. Headings’s top rate on her 2018 income of less than $55,000 was 12%. Her son’s top rate is 37%.
In past years, her son’s tax bill would have been far lower. But a 2017 change to the so-called Kiddie Tax often boosts rates on “unearned” income received by children of middle- and low-income families—including her son.
https://www.msn.com/en-us/money/markets/the-surprising-tax-bill-for-sons-and-daughters-of-gold-star-families/ar-AABb9t9?li=BBnb7Kz