The Kiddie Tax

Investment income earned by a child is taxed. If a child earns a considerable amount of interest income, then the kiddie tax is levied.

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Kiddie tax: the basics

Children under the age of 14 with more than $1,600 in investment income are required to pay tax at their parent's higher tax rate.

This is called the "kiddie tax".

Kiddie tax: the details

This is how the kiddie tax is calculated

  • the first $800 of the child's income is not taxed at all,
  • the next $800 is taxed at the child's lower tax rate and
  • the remainder is taxed at the parent's tax rate.

Use Form 8615 or Form 8814 depending on if your child is filing his/her own return or not.

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The H&R Block online interview asks for your child's information and the kiddie tax is then applied and your tax return is adjusted.
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Related IRS publications

Get more information about your child's taxes from Publication 929.

If you are filing a paper return, you will also need to include Schedule C with your 1040 form. (If you file online, this will be taken care of for you electronically.)

Note: you will need an Adobe Acrobat Reader to view these publications, which you can get here.

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Read this disclaimer: This internet site provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. We make no guarantees as to the validity of the information presented. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation.