At what age does the Kiddie Tax stop applying?

The Kiddie Tax never applies once a child reaches age 24. For ages 19-23, it only applies if the child is a full-time student and their earned income does not exceed 50% of their total support. For age 18, it applies unless earned income exceeds 50% of support. Under age 18, it always applies.

What counts as unearned income for the Kiddie Tax?

Unearned income includes interest, dividends, capital gains (including crypto), prediction market gains, gambling winnings, trust distributions, and scholarship amounts exceeding qualified tuition. Wages and self-employment income are earned income and are NOT subject to the Kiddie Tax.

Can the parent include the child's income on their own return?

Only if the child's income is exclusively interest and dividends (including capital gain distributions), gross income is under $12,500, and no estimated tax payments or backup withholding exist. This is done on Form 8814, but it is generally less favorable because the parent loses the child's lower bracket layers.

How is the Kiddie Tax calculated?

The child's net unearned income (unearned income minus $2,700 for TY2025) is added to the parent's taxable income. The incremental tax - the difference between the parent's tax with and without the child's income - is the Kiddie Tax. This effectively taxes the child's unearned income at the parent's marginal rate.

Kiddie Tax Checklist - Form 8615 Documents | Monaco CPA

Age and Status Verification

Child's date of birth (verified from government ID or prior return)
Age as of December 31 of the tax year
Age rules: under 18 = Kiddie Tax applies automatically; age 18 = applies unless earned income exceeds 50% of support; ages 19-23 = applies only if full-time student AND earned income does not exceed 50% of support
Confirm child is claimed as a dependent (or eligible to be claimed)
Confirm child is NOT married filing jointly

Full-Time Student Documentation (Ages 19-23)

Proof of full-time student status for 5+ months during the tax year
Educational institution name and enrollment records
Form 1098-T, school enrollment letter, or organizer confirmation

Unearned Income Records

Form 1099-INT (interest income)
Form 1099-DIV (dividends, including qualified and capital gain distributions)
Form 1099-B or 1099-DA (capital gains, including crypto)
Prediction market gains records (Kalshi, Polymarket)
W-2G (gambling winnings)
Schedule K-1 (trust and estate distributions)
Scholarship/fellowship amounts exceeding qualified tuition
Note: Form 8615 is required when total unearned income exceeds $2,700 (TY2025)

Earned Income Records

Child's W-2 forms (wages are NOT subject to Kiddie Tax)
Child's self-employment income records (if any)
Total support amount documentation (for the 50% of support test if ages 18-23)

Parent Information (Required for Form 8615)

Parent's name and SSN
Parent's filing status
Parent's taxable income (from parent's return or confirmed estimate)
If divorced/separated: use custodial parent's return
If custodial parent remarried: use parent with higher taxable income
Information on any other children also subject to Kiddie Tax (income is aggregated)

Form 8615 vs. Form 8814 Comparison

Form 8814 eligibility: child's income is ONLY interest and dividends, gross income under $12,500, no estimated payments or withholding in child's name
If eligible for Form 8814: compare tax results of both approaches (Form 8814 is often less favorable)

State-Specific Items

NJ imposes a state-level Kiddie Tax using NJ GIT rate schedules
PA does NOT impose a state-level Kiddie Tax (flat 3.07% rate applies regardless of age)

Kiddie Tax Checklist

Age and Status Verification

Full-Time Student Documentation (Ages 19-23)

Unearned Income Records

Earned Income Records

Parent Information (Required for Form 8615)

Form 8615 vs. Form 8814 Comparison

State-Specific Items

Frequently Asked Questions

Related Pages

Have Your Documents Ready?

Kiddie Tax Checklist

Age and Status Verification

Full-Time Student Documentation (Ages 19-23)

Unearned Income Records

Earned Income Records

Parent Information (Required for Form 8615)

Form 8615 vs. Form 8814 Comparison

State-Specific Items

Frequently Asked Questions

Related Pages

Have Your Documents Ready?

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