2016 Kiddie Tax Threshold
The 2016 Kiddie Tax Threshold is $1,050.
Effective 2016-01-01Source: Rev. Proc. 2015-53 (IRS)Verified 2026-08-29
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 Form 8615, unearned income includes all taxable income other than earned income. This encompasses a wide range of income types: taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, and similar investment income. 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. Essentially, any income that is not compensation for personal services - such as wages, tips, or other payments received for work - is treated as unearned income for kiddie tax purposes. The $1,050 unearned income threshold is the level at which a dependent child may need to file a return at all, while the kiddie tax itself applies when unearned income exceeds the higher threshold stated in the filing conditions.
Unearned income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc.
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 purpose of Form 8615 is to tax a child's unearned income at the parent's tax rate when that rate is higher than the child's own rate. For children under age 18 and certain older children (those age 18 who did not have earned income exceeding half their support, and full-time students age 19 to 23 who did not have earned income exceeding half their support), unearned income over $2,100 is taxed at the parent's rate. If the child's unearned income is more than $2,100, Form 8615 must be used to figure the child's tax. This means the child's own tax bracket is not necessarily the end of the story: even if the child would otherwise owe little or no tax at their own low rate, the excess unearned income is recalculated using the parent's higher marginal rate, ensuring that families cannot shift investment income to children to avoid tax at the parents' rate. The $1,050 unearned income threshold is the level at which a dependent child may need to file a return at all.
unearned income over $2,100 is taxed at the parent's rate if the parent's rate is higher than the child's.
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 threshold
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.