Understanding IRS Form 8615: Kiddie Tax Rules for Children's Investment Income
Prevents tax avoidance by taxing a child's unearned income at the parents' marginal rate.
Who Must File Form 8615?
- Under age 18 with unearned income > $2,500 (2024)
- Age 18-23 full-time students with unearned income > $2,500
- No earned income providing >50% of own support
Applies to investment income (dividends, interest, capital gains) not wages.
2024 Kiddie Tax Thresholds
| Income Range | Tax Treatment |
|---|---|
| First $1,300 | Tax-free (standard deduction) |
| $1,301-$2,600 | Taxed at child's rate (10%) |
| Over $2,600 | Taxed at parents' marginal rate |
Key Calculation Components
- Parental linkage: Uses parents' highest marginal tax rate
- Net unearned income: Total investment income minus $2,600
- Trust/estate rates: Alternative calculation method available
- Form 8814 option: Parents may elect to report on their return
Common Planning Strategies
- Tax-efficient investing: Municipal bonds, growth stocks
- Timing gains: Realize when child reaches age 24
- 529 plans: Tax-free growth alternative
- Custodial Roth IRAs: For children with earned income
Related Tax Documents
- Form 1040 (Child's tax return)
- Form 8814 (Parent's election)
- Form 1099-DIV/INT (Investment income)
- Form 5498 (ESA/529 contributions)
Need Kiddie Tax Assistance?
KARME Tax Services provides:
- Kiddie tax calculations and filings
- Family income-shifting strategies
- College savings plan optimization
- IRS audit defense for custodial accounts
Call 972-519-0041 or Get Family Tax Help
Specialized support for trust-owned custodial accounts