Can I Claim the Kiddie Tax on My Child's Investment Income?

The "kiddie tax" isn't something you claim — it's a tax rule that taxes your child's unearned income (interest, dividends, capital gains) at your marginal tax rate once it exceeds $2,500 (2024). It applies to children under 19, or full-time students under 24, who are claimed as dependents. The first $1,300 of unearned income is tax-free (covered by the child's standard deduction), and the next $1,300 is taxed at the child's rate. Everything above $2,600 is taxed at the parent's rate. The parent can elect to include a child's unearned income on their own return using Form 8814, or the child files Form 8615 with their own return. The kiddie tax limits the effectiveness of income-shifting strategies involving investment accounts for minors.