J.K. Lasser's Your Income Tax 2023, 2nd Edition

CHAPTER 24Computing the “Kiddie Tax” on Your Child's Unearned Income

24.1	Filing Your Child's Return	507
24.2	Children Subject to “Kiddie Tax” for 2022	508
24.3	Computing “Kiddie Tax” on Child's Return	509
24.4	Parent's Election To Report Child's Dividends and Interest	509

If the “kiddie tax” applies to a child, the child's 2022 investment income in excess of $2,300 is taxed at the parent's marginal tax rate (24.3).

The kiddie tax applies not only to children under age 18, but also to children who are age 18 or full‐time students age 19—23 who do not have earned income exceeding half of their support (24.2). Only investment income of a child over $2,300 is subject to the kiddie tax, not wages or self‐employment earnings.

The kiddie tax is generally figured on Form 8615 as part of the computation of the child's regular tax liability for the year. The liability from Form 8615 is then entered on the child's Form 1040 tax return, and Form 8615 is attached. Instead of completing Form 8615, the parent of a child under age 19 (or under 24 if a full‐time student) may elect on Form 8814 to report the child's investment income on the parent's own return, provided the child received only interest and dividend income. If the parent elects on Form 8814 to report the child's investment income, the tax on the child's income could be higher than if a separate return for the child was filed (24.4).

24.1 Filing Your Child's Return

To discourage substantial income splitting ...