How much unearned income can a child have before paying taxes? Or filing a return?

If your child has investments (unearned income) and that’s their only source of income, then you generally follow the kiddie tax rules shown below.

For the 2024 tax year, a child can earn up to $1,300 unearned income tax-free. 

Income above this amount is subject to tax under the kiddie tax rules: 

• The first $1,300 of unearned income is tax-free.
• The next $1,300 is taxed at the child’s own tax rate (usually 10%).
• Any unearned income above $2,600 is taxed at the parents’ marginal tax rate. 

Do I have to file a return for my child’s unearned income?

A child who can be claimed as a dependent must file a tax return if their total unearned income is more than $1,300 for the 2024 tax year. 

Parents have two options for reporting a child’s unearned income: 

1. The child files their own return and attaches Form 8615, Tax for Certain Children Who Have Unearned Income if their unearned income is over $2,600.
2. The parents include the child’s income on their own return using Form 8814, Parents’ Election To Report Child’s Interest and Dividends, provided the child’s only income is from interest and dividends and totals less than $13,000.

If your child has other types of income, you must file a return for the child. You can’t report the income on your return. Other income includes earned income or capital gains / losses from stock sales.