A child’s investment income above a small threshold is taxed at the parents’ rate, not the child’s — closing off a strategy of shifting investment income to a lower-bracket child.
How it works
The first tier of unearned income is tax-free. The next tier is taxed at the child’s own rate. Everything above that combined threshold is taxed at the parents’ marginal rate instead.
What this does not include
The kiddie tax applies only to unearned income (dividends, interest, capital gains) — a child’s wages from an actual job are always taxed at the child’s own rate regardless of amount, which this calculator’s unearned-income-only scope reflects.
How to use this calculator
- Enter the child’s unearned income, the child’s rate, and the parents’ rate.
Frequently asked questions
Who is subject to the kiddie tax?
Children under 18, and dependent full-time students age 19-23, with unearned income above the annual threshold.
Can a parent report a child’s income on their own return instead?
Sometimes, using Form 8814, avoiding the need for the child to file separately — though this can affect the parent’s own tax picture differently than a separate child return.
Does the kiddie tax apply to a child’s earned income from a summer job?
No — earned income is always taxed at the child’s own rate; the kiddie tax targets unearned (investment) income specifically.
