The Kiddie Tax
Does your child need to file a return?
If you're a parent, your child's taxable income is inherently linked to yours. Whether your child needs to file a tax return depends on a number of factors, including age and type of income. In some cases your child's income can be reported on your return.
In general, your child must file a return if:
- His or her unearned income was more than $1000 for 2013
- His or her earned income was more than $6,100 for 2013
- His or her gross income (earned plus unearned) was more than the larger of $1000 plus $350
IRS Publication 929 is very helpful in sorting through the intricacies of the rules regarding whether or not your child needs to file. You may also want to consult with your tax professional and refer to the instructions for IRS Form 1040 for details.
Special tax rules for a child’s unearned income—the Kiddie Tax
The IRS has special rules for taxing your child’s unearned income.
- If your child is under 19 (or under 24 and a full-time student) and has more than $950 of unearned (investment) income (and has no other income), he or she must file a return.
- If your child is under 19 (or under 24 and a full-time student) and has unearned income between $951 and $1,900, it is taxed at their rate. After that, unearned income over $1,900 is taxed at your rate.