These are just some of the names of changes in the tax laws. Each year there is a new tax law and a new set of initials to learn, and the way things are going, don't be too surprised to see another change early in the 90s. With that in mind, you must take full advantage of all the deductions available to you under the law.
Earned income is all compensation for personal services actually rendered.
Children are taxed at their own rate on reasonable compensation for services. The key words are reasonable rate. No kiddie tax to worry about. The first thing is to make sure that the child is doing enough work to justify the amount being paid. The money that your child puts into an IRA accumulates on a tax-deferred basis.