2016 Kiddie Tax Threshold
For 2016, the Kiddie Tax Threshold figures are $1,050 (Unearned income reduction amount) and $2,100 (Unearned income filing trigger).
Effective 2016-01-01Source: Rev. Proc. 2015-53 (IRS)Verified 2026-09-03
Unearned income filing triggerSource: 2016 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)Verified 2026-09-03
Who it applies to
Children subject to the kiddie tax under § 1(g) - minor children with unearned income - for taxable years beginning in 2016.
What changed this year, and why
For 2016, the unearned income threshold used in the "kiddie tax" under IRC § 1(g) is $1,050.
Common questions
- What is the Kiddie Tax unearned income threshold for 2016?
- For taxable years beginning in 2016, the threshold amount under § 1(g)(4)(A)(ii)(I) is $1,050. This amount is used to reduce the net unearned income reported on the child's return that is subject to the kiddie tax. The same $1,050 amount is also used under § 1(g)(7) to determine whether a parent may elect to include a child's gross income on the parent's return.
The five conditions, and the three age tests
Form 8615 must be filed for a child who meets all five conditions listed in this section. The first condition is that the child had more than $2,100 of unearned income. The second is that the child is required to file a tax return. The third condition has three alternative age tests the child must meet: (a) the child was under age 18 at the end of 2016; (b) the child was age 18 at the end of 2016 and did not have earned income that was more than half of the child's support; or (c) the child was a full-time student at least age 19 and under age 24 at the end of 2016 and did not have earned income that was more than half of the child's support. The fourth condition requires that at least one parent was alive at the end of 2016, and the fifth is that the child does not file a joint return. The term "child" includes adopted children and stepchildren, and the rules apply whether or not the child is a dependent, but not if neither parent was alive at year's end. The $1,050 unearned income threshold determines whether a dependent child must file a return at all.
1. The child had more than $2,100 of unearned income.
2016 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
What counts as unearned income
For the 2016 kiddie tax, the Internal Revenue Service defines unearned income as essentially everything that is not earned income from personal services. It covers taxable interest, ordinary dividends, capital gains and capital gain distributions, rents, and royalties. It also reaches taxable social security benefits, pension and annuity income, taxable scholarship and fellowship grants that were not reported on Form W-2, unemployment compensation, alimony, and income received as the beneficiary of a trust (other than earned income from that trust). In practice, this means wages or self-employment pay from a job the child actually worked are earned income and stay out of the kiddie-tax base, while investment returns, trust distributions, and most other passive receipts fall into the unearned category and, once they pass the $2,100 threshold, are taxed through Form 8615 at the parent's rate.
Unearned Income For Form 8615, “unearned income” includes all taxable income other than earned income as defined later. Unearned income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, taxable scholarship and fellowship grants not reported on Form W-2, unemployment compensation, alimony, and income (other than earned income) received as the beneficiary of a trust.
2016 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
The support test that decides whether an older child is caught
For purposes of the kiddie tax age tests, the child's support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure the child's support, you count support provided by you, the child, and others. However, a scholarship received by the child is not considered support if the child is a full-time student. This support test is critical for children age 18 and full-time students age 19 to 23: these older children are subject to the kiddie tax only if their earned income was not more than half of their support. If the child's earned income exceeded half of their support, the kiddie tax does not apply to them, even if they otherwise meet the other conditions. The $1,050 unearned income threshold is the level at which a dependent child may need to file a return at all.
Support. Your child's support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities.
2016 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
Reporting the child's income on the parent's return instead
Instead of filing Form 8615 for the child, a parent may be able to elect to report the child's interest, ordinary dividends, and capital gain distributions on the parent's own return. If the parent makes this election, the child will not have to file a return or Form 8615. However, the federal income tax on the child's income, including qualified dividends and capital gain distributions, may be higher if this election is made. The election is made on Form 8814, Parents' Election To Report Child's Interest and Dividends. This option can simplify filing by eliminating the need for a separate return for the child, but parents should consider whether the tax cost outweighs the convenience. The $1,050 unearned income threshold determines whether a dependent child may need to file a return at all.
For more details, see Form 8814, Parents' Election To Report Child's Interest and Dividends.
2016 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
Why the child's own bracket is not the end of it
The 2016 instructions for Form 8615 explain that the point of the kiddie tax is not simply to tax the child's investment income, but to make sure it is taxed at the parent's rate when that rate is higher than the child's own. Once a child's unearned income rises above $2,100, the child cannot just pay tax at the child's typically lower bracket on the full amount: the excess is run through Form 8615 and shifted up to the parent's marginal rate. So even though the child files a return in the child's own name, the tax on income over $2,100 is figured using the parent's bracket, which is why the child's own rate is not the end of the story.
Purpose of Form For children under age 18 and certain older children described below in Who Must File, unearned income over $2,100 is taxed at the parent's rate if the parent's rate is higher than the child's. If the child's unearned income is more than $2,100, use Form 8615 to figure the child's tax.
2016 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
A January 1 birthday counts the child a year older
For the 2016 Kiddie Tax Threshold, the IRS uses a specific rule to determine a child's age at year-end when their birthday falls on January 1. This matters because the child's age determines whether the kiddie tax rules apply. The chart treats a child born on January 1, 1999 as 18 years old at the end of 2016, a child born on January 1, 1998 as 19, and a child born on January 1, 1993 as 24. The rule counts the child as having already reached that age by December 31, even though their actual birthday doesn't arrive until the next calendar year. This age determination is critical for meeting the filing conditions under the kiddie tax rules. If a child is considered 18 or older under this rule, the kiddie tax may not apply depending on their earned income and other factors. Taxpayers should consult the chart in Publication 929 to determine whether their child with a January 1 birthday meets the age requirements for the 2016 tax year.
Certain January 1 birthdays. Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under Who Must File. IF a child was born on... THEN, at the end of 2016, the child is considered to be... January 1, 1999 18* January 1, 1998 19** January 1, 1993 24*** *This child is not under age 18. The child meets condition 3 only if the child did not have earned income that was more than
2016 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
Passing the kiddie tax does not clear the child of AMT or the investment income tax
When a child's tax is calculated using Form 8615 for the 2016 Kiddie Tax Threshold, passing the kiddie tax calculation does not necessarily mean the child owes no additional taxes. The IRS specifies that a child whose tax is figured on Form 8615 may owe the alternative minimum tax (AMT), which is a separate tax calculation that applies to certain types of income and deductions. Additionally, the child may be subject to the Net Investment Income Tax (NIIT), which is a 3.8% tax on the lesser of net investment income or the excess of the child's modified adjusted gross income over the threshold amount. These taxes are calculated independently from the kiddie tax and use different forms: Form 6251 for AMT and Form 8960 for NIIT. Even if the child's unearned income above the $1,050 threshold is properly taxed at the parent's rate through the kiddie tax calculation, the child may still owe these additional taxes based on their specific income types and amounts. Taxpayers should review both AMT and NIIT rules when preparing a child's return to ensure all applicable taxes are calculated correctly.
Alternative Minimum Tax A child whose tax is figured on Form 8615 may owe the alternative minimum tax. For details, see Form 6251, Alternative Minimum Tax—Individuals, and its instructions. Net Investment Income Tax A child whose tax is figured on Form 8615 may be subject to the Net Investment Income Tax (NIIT). NIIT is a 3.8% tax on the lesser of net investment income or the excess of the child's modified adjusted gross income (MAGI) over the threshold amount.
2016 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2015-53 (IRS)
- Unearned income reduction amount
For taxable years beginning in 2016, the amount in § 1(g)(4)(A)(ii)(I), which is used to reduce the net unearned income reported on the child's return that is subject to the "kiddie tax," is $1,050.
2016 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
- Unearned income filing trigger
1. The child had more than $2,100 of unearned income.