The TCJA modified tax rates and brackets used to calculate the tax on the unearned income of a child. Effective January 1, 2018, the child’s tax rate was no longer affected by his parent’s tax return or the unearned income of his siblings. Unearned income exceeding the threshold amount of $2,100 will be taxed using the brackets and rates for estates and trusts.
Form 8615 must be completed for individuals who meet all the following requirements:
1. The child had more than $2,100 of unearned income 2. The child is required to file a tax return 3. The child was either:
Under the age of 18 on December 31, 2019
Age 18 at the end of 2019 and didn’t have earned income that was more than half of his support, or
A full-time student at least age 19 or under age 24 on December 31, 2019, and didn’t have earned income that was more than half of his support.
4. At least one of the child’s parents was alive on December 31, 2019 5. The child doesn’t file a joint return for tax year 2019
The change applies to tax years beginning after December 31, 2017, and ending on December 31, 2025.
For 2019, the amount used to reduce the net unearned income reported on the child’s return subject to the “kiddie tax” is $1,100. This amounts to the minimum dependent standard deduction adjusted for inflation. Parents may elect to report a child’s income on their return if the child’s gross income for 2019 was less than $11,000.