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Tax on a child's investment and other unearned income (kiddie tax)
There are basically two situations may affect the tax and reporting of the unearned income of certain children.
If your child’s interest, dividends, and other unearned income total more than $2,600 (For 2024 tax year), it may be subject to a specific tax on the unearned income of certain children. You must file Form 8615 to figure the child’s tax on unearned income over $2,600 if the child is under age 18, and in certain situations if the child is older.
If your child’s only income is interest and dividend income (including capital gain distributions) and totals less than $13,000 (For 2024 tax year), you may be able to elect to include that income on your return rather than file a return for your child. If you make this election, your child won’t have to file a tax return.
Here are some of the basic differences between these two forms. File any of these forms based on the following facts if ALL conditions are met.
Form 8615
- The child’s unearned income was more than $2,600
- Includes earned income
- AGE REQUIRMENTS: The child was under age 18 at the end of the tax year or the child was age 18 at the end of the tax year and didn’t have earned income that was more than half of the child’s support, or the child was a full-time student at least age 19 and under age 24 at the end of the tax year and the child didn’t have earned income that was more than half of the child’s support.
- The child is required to file a tax return for the tax year.
- The child does not file a joint return for the tax year.
- At least one of the child’s parents was alive at the end of the tax year.
Form 8814
- Child’s gross income was less than $13,000 for the tax year.
- Income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).
- AGE REQUIREMENTS: At the end of the tax year your child was under age 19 (or under age 24 if a full-time student).
- The child is required to file a return unless the parent make this election.
- The child does not file a joint return for the tax year.
- You’re the parent qualified to make the election or you file a joint return with your child’s other parent.
- No estimated tax payments were made for your child for the tax year, and no overpayment from the previous tax year (or from any amended return) was applied to the current tax year under your child’s name and Social Security number and no federal income tax was withheld from your child’s income under the backup withholding rules.
