![\"Kiddie](\"https:\/\/www.hrblock.com\/tax-center\/wp-content\/uploads\/2017\/06\/kiddie-tax-300x200.jpg\")
<\/figure><\/div>\n\n\nWhat is kiddie tax?<\/h2>\n\n\n\n
When you file taxes, you might need to factor in your child\u2019s unearned income. This is often called the kiddie tax. Introduced as part of the Tax Reform Act of 1986, the kiddie tax is a set of rules designed to prevent parents from transferring large amounts of money earning assets, such as stock dividends or other investments, to accounts held by their children to reduce their tax liability (and potentially get a lower tax rate.)<\/p>\n\n\n\n
Earned and unearned income definitions<\/h2>\n\n\n\n
Earned and unearned income are two terms that matter for kiddie tax because they impact how you\u2019ll file taxes. We\u2019ll define each before we dig into the guidelines of kiddie tax for parents.<\/p>\n\n\n\n
What is earned income for a child?<\/h3>\n\n\n\n
Earned income is generated through active participation. It includes income like:<\/p>\n\n\n\n
- \n
- Wages<\/li>\n\n\n\n
- Salaries<\/li>\n\n\n\n
- Professional fees<\/li>\n\n\n\n
- Other amounts your child received in exchange for professional services<\/li>\n<\/ul>\n\n\n\n
What is unearned income for a child?<\/h3>\n\n\n\n
Unearned income is income earned through passive participation; not generated from work, services, or business activities. It includes income from:<\/p>\n\n\n\n
- \n
- Taxable interest<\/li>\n\n\n\n
- Ordinary and qualified dividends<\/li>\n\n\n\n
- Capital gains from sales<\/li>\n\n\n\n
- Capital gain distributions<\/li>\n\n\n\n
- Rents<\/li>\n\n\n\n
- Royalties<\/li>\n\n\n\n
- Taxable social security benefits<\/li>\n\n\n\n
- Pension and annuity income<\/li>\n\n\n\n
- Taxable scholarship and fellowship grants not reported on the child\u2019s W-2<\/a><\/li>\n\n\n\n
- Unemployment compensation<\/li>\n\n\n\n
- Alimony<\/li>\n\n\n\n
- Income received as the beneficiary of a trust<\/li>\n\n\n\n
- Any other income that isn\u2019t earned income<\/li>\n<\/ul>\n\n\n\n
This unearned income can include amounts generated by assets that your child acquired using earned income, as well as nontaxable income such as tax-exempt interest. Note that this doesn’t count for the Foreign Earned Income Exclusion<\/a>.<\/p>\n\n\n\n
<\/div>File with H&R Block to get your max refund<\/h3>
\n\nFile online<\/a><\/div>\n\n\nFile with a tax pro<\/a><\/div>\n\n<\/div><\/div><\/div>\n\n\n\nKiddie tax 2025 rules<\/h2>\n\n\n\n
So, how does the kiddie tax work? Specific kiddie tax rules apply to certain children whose investment or unearned income is higher than the annual kiddie tax threshold. It comes down to income type, amount, filing status, parental situation, and if the minor falls within the kiddie tax age.<\/p>\n\n\n\n
The kiddie tax rules apply to any child who:<\/p>\n\n\n\n
- \n
- Has more than $2,700 of unearned income for the 2025 tax year<\/li>\n\n\n\n
- Has at least one living parent at the end of the tax year<\/li>\n\n\n\n
- Doesn\u2019t file a joint return<\/li>\n\n\n\n
- Is required to file a tax return<\/li>\n\n\n\n
- Is one of the following:
- Under age 18 at year\u2019s end,<\/li><\/ul>
- Age 18 and didn\u2019t have earned income that was more than half of their financial support, or<\/li><\/ul>\n
- \n
- At least age 19 and under age 24 at year\u2019s end, a full-time student, and didn\u2019t have earned income that was more than half of their own financial support<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n
Kiddie tax thresholds for 2025 (taxes filed in 2026)<\/h2>\n\n\n\n
<\/a>The kiddie tax threshold is adjusted each year to account for inflation.<\/p>\n\n\n\n
- \n
- The first $1,350 of unearned income is tax-free.<\/li>\n\n\n\n
- The next $1,350 is taxed at the child’s own tax rate (usually 10%).<\/li>\n\n\n\n
- Any unearned income above $2,700 is taxed at the parents’ marginal tax rate. <\/li>\n<\/ul>\n\n\n\n
<\/a>Unearned income tax rules for children subject to kiddie tax<\/h2>\n\n\n\n
You should report a child\u2019s unearned income if it\u2019s above the limits listed above.<\/p>\n\n\n\n
Even if you\u2019re eligible to report your child\u2019s unearned income on your return, you should consider filing a separate return for your child. Your filing choice should offer the best tax outcome based on your taxable income while adhering to the IRS\u2019 kiddie tax rules.<\/p>\n\n\n\n
Here are the disadvantages of reporting your child\u2019s income on your return:<\/strong><\/p>\n\n\n\n
- \n
- You might have to pay more tax. Adding income to your return could:
- Limit your IRA deduction<\/li><\/ul>
- Limit your Student Loan Interest Deduction<\/a><\/li><\/ul>\n
- \n
- Reduce the amount of itemized deductions, including medical expenses<\/li>\n<\/ul>\n<\/li>\n\n\n\n
- Your adjusted gross income (AGI)<\/a> might increase, which:
- Could affect your eligibility for certain credits. These credits include:
- American Opportunity Credit<\/a><\/li><\/ul>
- Lifetime Learning Credit<\/li><\/ul>
- Earned Income Credit (EIC)<\/a><\/li><\/ul>
- Child and Dependent Care Credit<\/a><\/li><\/ul><\/li><\/ul>\n
- \n
- Could lead you to pay the Alternative Minimum Tax (AMT)<\/a> or increase the amount of AMT you owe<\/li>\n<\/ul>\n<\/li>\n\n\n\n
- You can\u2019t claim deductions on your return that your child would be eligible for if they had filed a separate return.<\/li>\n<\/ul>\n\n\n\n
It also might be better to file a separate return for your child if your child:<\/p>\n\n\n\n
- \n
- Is blind<\/li>\n\n\n\n
- Has investment expenses or other itemized deductions<\/a><\/li>\n\n\n\n
- Is affected by early withdrawal of savings<\/li>\n<\/ul>\n\n\n\n
<\/a>Should you report tax on a child\u2019s unearned income using Form 8814 or Form 8615?<\/h2>\n\n\n\n
Your child\u2019s unearned income could be reported on two different forms: Form 8814 or Form 8615.<\/p>\n\n\n\n
Form 8814: Parent’s Election to Report Child’s Interest and Dividends<\/h3>\n\n\n\n
When you report your child\u2019s unearned income on your return<\/strong>, file Form 8814 with your return. You can include your child\u2019s unearned income on your return if:<\/p>\n\n\n\n
- \n
- Your child\u2019s age was either:
- Under age 19 at the end of the tax year, or<\/li><\/ul>\n
- \n
- Under age 24, if they were a full-time student<\/li>\n<\/ul>\n<\/li>\n\n\n\n
- Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).<\/li>\n\n\n\n
- The child\u2019s gross income was less than $13,500\u00a0in 2025. <\/li>\n\n\n\n
- The child would be required to file a tax return for the year if you didn\u2019t make the election.<\/li>\n\n\n\n
- The child doesn\u2019t file a joint return for the tax year.<\/li>\n\n\n\n
- Under your child\u2019s name and Social Security number (SSN), you didn\u2019t:
- Make an estimated tax payment<\/a> for the tax year.<\/li><\/ul>\n
- \n
- Apply a prior year overpayment to the current tax year.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
- No federal income tax was taken out of your child\u2019s income under backup withholding rules.<\/li>\n\n\n\n
- If you\u2019re not filing jointly with your child\u2019s other parent, you\u2019re the parent whose tax rate would be used to determine the kiddie tax.<\/li>\n<\/ul>\n\n\n\n
Form 8615: Tax for Certain Children Who Have Unearned Income<\/h3>\n\n\n\n
<\/a>If the kiddie tax applies upon tax preparation, file Form 8615 with your child\u2019s return<\/strong>. This form is used to figure out taxes on a child\u2019s unearned income.<\/p>\n\n\n\n
For 2025, a child must file Form 8615 if the following apply:<\/p>\n\n\n\n
- \n
- They have more than $2,700 in unearned income (like interest or investments).<\/li>\n\n\n\n
- They are required to file a tax return.<\/li>\n\n\n\n
- They aren\u2019t filing a joint tax return with a spouse.<\/li>\n\n\n\n
- At least one parent is still alive at the end of the tax year.<\/li>\n\n\n\n
- They fall within certain age limits. A child\u2019s age for tax purposes is based on how old they are at the end of the tax year. They must file Form 8615 if any of these conditions apply:
- They are under 18 at the end of the year.<\/li><\/ul>
- They are 18 years old, and their earned income is less than half of what they need for support.<\/li><\/ul>\n
- \n
- They are a full-time student, are at least age 19 and under age 24, and their earned income is less than half of their support.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n
<\/a><\/a><\/a>Get help filing taxes and navigating the kiddie tax rule<\/h2>\n\n\n\n
Get help reporting kiddie tax and related unearned income from H&R Block. Whether you choose to file with a tax pro<\/a> or file with H&R Block Online<\/a>, you can rest assured that we\u2019ll get you the biggest refund possible.<\/p>\n\n\n\n
<\/p>\n\n\n\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Does your child earn a passive income through custodial investment accounts? If so, something called \u201ckiddie tax\u201d could apply. Read on as we discuss important tax details so that when you\u2019re tax planning, you\u2019re not surprised by the extra income to report. What is kiddie tax? When you file taxes, you might need to factor […]<\/p>\n","protected":false},"author":1,"featured_media":67397,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[24,50],"tags":[],"class_list":["post-20690","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income","category-other-income"],"acf":[],"yoast_head":"
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- They are a full-time student, are at least age 19 and under age 24, and their earned income is less than half of their support.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n
- They are 18 years old, and their earned income is less than half of what they need for support.<\/li><\/ul>\n
- They are under 18 at the end of the year.<\/li><\/ul>
- Make an estimated tax payment<\/a> for the tax year.<\/li><\/ul>\n
- Under age 19 at the end of the tax year, or<\/li><\/ul>\n
- Is affected by early withdrawal of savings<\/li>\n<\/ul>\n\n\n\n
- You can\u2019t claim deductions on your return that your child would be eligible for if they had filed a separate return.<\/li>\n<\/ul>\n\n\n\n
- Could lead you to pay the Alternative Minimum Tax (AMT)<\/a> or increase the amount of AMT you owe<\/li>\n<\/ul>\n<\/li>\n\n\n\n
- Child and Dependent Care Credit<\/a><\/li><\/ul><\/li><\/ul>\n
- Earned Income Credit (EIC)<\/a><\/li><\/ul>
- Lifetime Learning Credit<\/li><\/ul>
- American Opportunity Credit<\/a><\/li><\/ul>
- Could affect your eligibility for certain credits. These credits include:
- Limit your Student Loan Interest Deduction<\/a><\/li><\/ul>\n
- Limit your IRA deduction<\/li><\/ul>
- You might have to pay more tax. Adding income to your return could:
- At least age 19 and under age 24 at year\u2019s end, a full-time student, and didn\u2019t have earned income that was more than half of their own financial support<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n
- Age 18 and didn\u2019t have earned income that was more than half of their financial support, or<\/li><\/ul>\n
- Under age 18 at year\u2019s end,<\/li><\/ul>