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What is the Kiddie Tax?

by TurboTax•48• Updated 4 days ago

The Kiddie Tax applies if your child:

  • has unearned income (usually from investments) exceeding $2,500
  • is required to file a return
  • isn’t filing jointly
  • is under age 19 (or 24 if a full-time student) as of January 1, 2024

Children who only have earned income from a job or self-employment, don’t make enough money to be required to file, or are filing jointly with their spouses are exempt from the Kiddie Tax.

Follow these steps to report your child's income on your return in TurboTax:

  1. Open or continue your return in TurboTax by selecting the Continue or Start button on the Tax Home screen.
  2. Search for child income and select the Jump to link.
  3. Answer the questions about your child's income.

Unemployment compensation is considered unearned income. A child who receives unemployment compensation may be subject to the Kiddie Tax, and as a result, may pay substantially higher tax than an adult receiving the same compensation.

The Kiddie Tax only applies to unearned income in excess of $2,500.

  • $0 - $1,250 isn't taxed.
  • $1,251 - $2,500 is taxed at the child’s tax rate.
  • Over $2,500 is taxed at the parents’ marginal tax rate.

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