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Kiddie Tax

What is Kiddie Tax?

Kiddie Tax rule taxes certain unearned income of a child at the parent’s marginal rate, no matter whether the child can be claimed as a dependent on the parent’s return.

Rules for Kiddie Tax

The following two rules may affect the tax on the investment income of certain children:

  • If the child’s interest, dividends, and other investment income total more than $1,900, part of that income may be taxed at the parent’s tax rate instead of the child’s tax rate.
  • If the child’s interest and dividend income (including capital gain distributions) total less than $9,500, the child’s parent may be able to elect to include that income on the parent’s return rather than file a return for the child.

For either rule to apply, the child must be required to file a return.

How does the kiddie Tax work?

You can pay the kiddie tax in either of two ways:

  • Include your child’s investment income on your tax return (using Form 8814) or,
  • Have your child file a separate return (using Form 8615).

A parent may be able to avoid having to file a tax return for the child by including the child’s income on the parent’s tax return. A parent can elect to do this if all of the following conditions are met:

  • At the end of the tax year the child was under age 19 or under age 24, if a full-time student
  • The child’s interest and dividend income was less than $9,500 for the tax year
  • The child had income only from interest and dividends, which includes Alaska Permanent Fund dividends and capital gain distributions
  • No estimated tax payments were made for the tax year, and no prior tax year’s tax overpayment was applied to the current tax year, under the child’s name and social security number
  • No federal income tax was withheld from the child’s income under backup withholding
  • The child is required to file a return unless the parent makes this election
  • The child does not file a joint return for the tax year
  • The parent is the parent qualified to make the election or files a joint return with the child’s other parent


8814 – Parent Election of Child Income
8615 – Children Income
Publication 550 – Investment Income and Expenses
Publication 929 – Tax Rules for Children & Dependents

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