2021 Kiddie Tax Threshold
The 2021 Kiddie Tax Threshold is $1,100.
Effective 2021-01-01Source: Rev. Proc. 2020-45 (IRS)Verified 2026-09-01
Compared with 2020
Every figure on this page is unchanged from 2020.
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Unearned income threshold | $1,100 | $1,100 | +$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
A child must file Form 8615 for 2021 if all five conditions are met. First, the child had more than $2,200 of unearned income. Second, the child is required to file a tax return. Third, the child meets one of three age tests: was under age 18 at the end of 2021; was age 18 and did not have earned income that was more than half of the child's support; or was a full-time student at least age 19 and under age 24 and did not have earned income that was more than half of the child's support. Fourth, at least one of the child's parents was alive at the end of 2021. Fifth, the child does not file a joint return for 2021. The term "child" includes a legally adopted child and a stepchild, and these rules apply whether or not the child is a dependent. If neither parent was living at the end of the year, the rules do not apply.
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. It also covers taxable social security benefits, pension and annuity income, taxable scholarship and fellowship grants that are not reported on Form W-2, unemployment compensation, alimony, and income (other than earned income) received as the beneficiary of a trust. 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)
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 threshold
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.