Changes to the Kiddie Tax
For a child wage earner under age 19, the first $1,300 of any unearned income is tax free in 2024. According to the IRS, “unearned income” includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. The next $1,300 is taxed at the child’s rate. Any unearned income above $2,600 is taxed at the parents’ tax rate.
There are two different ways to report your child’s unearned taxable income: the parents can report it on their tax return by attaching Form 8814 to their Form 1040, or the child can report in on their tax return by attaching Form 8615 to their Form 1040.
If you have any questions, contact your local tax professionals at Meadville Tax Service 814-333-2488 or info@meadvilletaxservice.com.