2021 Kiddie Tax Threshold
For 2021, the Kiddie Tax Threshold figures are $1,100 (Unearned income reduction amount) and $2,200 (Unearned income filing trigger).
Effective 2021-01-01Source: Rev. Proc. 2020-45 (IRS)Verified 2026-09-03
Unearned income filing triggerSource: 2021 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)Verified 2026-09-03
Compared with 2020
Every figure on this page is unchanged from 2020.
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Unearned income reduction amount | $1,100 | $1,100 | +$0 (+0.0%) |
| Unearned income filing trigger | $2,200 | $2,200 | +$0 (+0.0%) |
Who it applies to
Children subject to the kiddie tax under IRC § 1(g) and their parents, for taxable years beginning in 2021
What changed this year, and why
For taxable years beginning in 2021, the unearned income threshold used to reduce net unearned income subject to the kiddie tax under IRC § 1(g)(4)(A)(ii)(I) is $1,100. This is the same amount as for 2020. The $1,100 threshold also applies under § 1(g)(7) for determining whether a parent may elect to include a child's gross income in the parent's gross income. For the parental election, the child's gross income must be more than $1,100 but less than ten times that amount for 2021.
Common questions
- What is the kiddie tax?
- The kiddie tax is a set of IRS rules under Internal Revenue Code § 1(g) that apply to certain children's unearned income, such as interest, dividends, and capital gains. The rules determine how much of a child's unearned income is taxed at the child's rate versus the parents' rate.
- Can a parent report a child's unearned income on the parent's own return?
- If a child's gross income for 2021 is more than $1,100 but less than ten times that amount, the parent may elect to include the child's gross income on the parent's own return rather than filing a separate return for the child.
The five conditions, and the three age tests
Five conditions decide whether this form belongs in the return, and because they are cumulative a child can be very well invested and still be outside the rule entirely. For 2021 the amount that starts the enquiry is unearned income above $2,200. The child also has to be required to file a return in the first place: no filing requirement, no form. Age does most of the sorting after that. Every child under 18 at the end of 2021 is inside it. So is a child who was 18, and a full-time student who was at least 19 and under 24 - but for those two the rule steps back if the child's own earnings covered over half of the cost of supporting them, which is what takes a self-supporting young adult out. The remaining conditions have nothing to do with the child's finances at all: at least one parent must have been alive when 2021 ended, because the tax is figured by reference to a parent, and the child must not be filing a joint return for the year.
Form 8615 must be filed for any child who meets all of the following conditions. 1. The child had more than $2,200 of unearned income. 2. The child is required to file a tax return. 3. The child either: a. Was under age 18 at the end of 2021, b. Was age 18 at the end of 2021 and didn’t have earned income that was more than half of the child's support, or c. Was a full-time student at least age 19 and under age 24 at the end of 2021 and didn’t have earned income that was more than half of the child's support. (Earned income is defined later. Support is defined below.) 4. At least one of the child's parents was alive at the end of 2021. 5. The child doesn’t file a joint return for 2021.
2021 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
What counts as unearned income
For purposes of Form 8615, unearned income is defined as all taxable income other than earned income. This includes a broad range of investment and passive income sources: taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, and royalties. Wages, salaries, and other compensation for personal services performed by the child are excluded because they are earned income, not unearned income.
For Form 8615, “unearned income” includes all taxable income other than earned income. 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.
2021 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 2021, a child who was age 18, or a full-time student age 19 through 23, is subject to the kiddie tax only if the child's earned income was not more than half of the child's support. This means the IRS looks at whether the child mainly supported himself or herself with wages and salaries, or whether others - typically the parents - provided most of the child's living costs. The child's total support includes amounts spent on food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. Support furnished by the parents, by the child, and by other people is all counted. However, a scholarship received by a full-time student is excluded from the support total. If the child's earned income exceeded half of this support figure, the child is treated as self-supporting and the kiddie tax does not apply, even though the child otherwise meets the age test.
Support. Your support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities.
2021 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
Reporting the child's income on the parent's return instead
A parent may elect to report the child's interest, ordinary dividends, and capital gain distributions on the parent's own return instead of filing a separate return for the child. If the parent makes this election, the child does 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 using Form 8814, Parents' Election To Report Child's Interest and Dividends. Taxpayers should consider the potential tax impact carefully, as filing under the parent's rate may not always be beneficial compared to using Form 8615 to compute the child's tax at the parent's rate.
If the parent makes this election, the child won’t 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. For more details, see Form 8814, Parents’ Election To Report Child's Interest and Dividends.
2021 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
Form 8615 is used to figure the tax for children under age 18 and certain older children who have unearned income over $2,200. The purpose of the form is to tax that unearned income at the parent's rate if the parent's rate is higher than the child's rate. The form implements what is commonly called the "kiddie tax," which prevents parents from shifting investment income to children in lower tax brackets to reduce the family's overall tax. If the child's unearned income exceeds $2,200, the excess is taxed using the parent's marginal tax rate through the computation on Form 8615, rather than at the child's own lower rates. This ensures that large amounts of unearned income received by a child are taxed at rates comparable to what the parents would pay on that same income.
Purpose of Form For children under age 18 and certain older children described below in Who Must File, unearned income over $2,200 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 $2,200, use Form 8615 to figure the child's tax.
2021 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
A January 1 birthday counts the child a year older
Under the 2021 Kiddie Tax Threshold rules published by IRS, a child born on January 1 is treated as being one year older than their actual age at the end of the tax year. This quirk matters for determining whether the child meets the age conditions that trigger the kiddie tax. For example, a child born on January 1, 2004 is considered age 18 at the end of 2021, a child born on January 1, 2003 is considered age 19, and a child born on January 1, 1998 is considered age 24. These age designations determine which condition the child must satisfy to be subject to the tax. An 18-year-old must not have had earned income exceeding half of their support. A 19-year-old must have been a full-time student who did not have earned income exceeding half of their support. A 24-year-old should not use Form 8615 at all. This rule ensures that children whose birthdays fall on the first day of the year are not disadvantaged or misclassified when applying the $1,100 unearned income threshold and other kiddie tax requirements.
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 you were born on... THEN, at the end of 2021, you are considered to be... January 1, 2004 18* January 1, 2003 19** January 1, 1998 24*** *This child isn't under age 18. The child meets condition 3 only if the child didn't have earned income that was more than half of the child's support. **This child meets condition 3 only if the child was a full-time student who didn't have earned income that was more than half of the child's support. ***Don’t use Form 8615 for this child.
2021 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
Under the 2021 Kiddie Tax Threshold rules published by IRS, passing the kiddie tax calculation does not clear the child of all additional taxes. A child whose tax is figured on Form 8615 may still owe the Alternative Minimum Tax (AMT), which is calculated separately using Form 6251. The child may also be subject to the Net Investment Income Tax (NIIT), a 3.8% tax on the lesser of net investment income or the excess of modified adjusted gross income over the threshold amount. The NIIT is calculated using the appropriate IRS form for that purpose. These taxes apply independently of the kiddie tax rules. Even when a child's unearned income exceeds $1,100 and is properly taxed at the parent's rate on Form 8615, the AMT and NIIT may still increase the child's total tax liability. The child and parents should review the instructions for these additional taxes to determine if they apply to the child's situation.
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.
2021 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
If a parent's income later changes, the child's tax has to be refigured
Under the 2021 Kiddie Tax Threshold rules published by IRS, if a parent's income changes after the child's tax return is filed, the child's tax must be refigured using the adjusted amounts. This requirement also applies if there are changes to the net unearned income of other children for whom the parent is required to file Form 8615. The child's tax depends on the parents' taxable income and filing status, so any change in the parents' situation affects the calculation. If the refigured tax results in a different amount than what was originally filed, the child must file Form 1040-X, Amended U.S. Individual Income Tax Return, to correct the return. This amended return requirement ensures that the child's tax liability accurately reflects the parents' actual income for the year. Families should monitor changes in the parents' income throughout the year and file an amended return promptly if adjustments are needed, particularly if the parents' income increases or decreases significantly from what was originally reported on the child's Form 8615.
Amended Return If the parents’ income changes after the child’s return is filed, the child’s tax must be refigured using the adjusted amounts. The child's tax must also be refigured if there are changes to the net unearned income of other children for whom the parent is required to file a Form 8615. If the child's tax changes, file Form 1040-X.
2021 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. 2020-45 (IRS)
- Unearned income reduction amount
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 $1,100.
2021 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
- Unearned income filing trigger
1. The child had more than $2,200 of unearned income.