{"id":2238,"date":"2024-01-17T06:42:00","date_gmt":"2024-01-17T06:42:00","guid":{"rendered":"https:\/\/www.irstaxapp.com\/?p=2238"},"modified":"2024-03-02T03:14:14","modified_gmt":"2024-03-02T03:14:14","slug":"kiddie-tax-2023-calculation-made-simple","status":"publish","type":"post","link":"https:\/\/www.irstaxapp.com\/kiddie-tax-2023-calculation-made-simple\/","title":{"rendered":"Kiddie Tax Calculator for 2023 &#038; 2024 With Tax Rules Made Simple!"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><picture><source srcset=\"https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-1024x557.webp 1024w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-300x163.webp 300w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-768x418.webp 768w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-150x82.webp 150w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-750x408.webp 750w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-1140x621.webp 1140w,https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax.webp 1240w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" type=\"image\/webp\"><img src=\"https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-1024x557.png\" height=\"557\" width=\"1024\" srcset=\"https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-1024x557.png 1024w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-300x163.png 300w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-768x418.png 768w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-150x82.png 150w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-750x408.png 750w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax-1140x621.png 1140w, https:\/\/www.irstaxapp.com\/wp-content\/uploads\/2023\/01\/kiddie-tax.png 1240w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" class=\"wp-image-7510 sp-no-webp\" alt=\"kiddie tax\" decoding=\"async\" loading=\"lazy\"  > <\/picture><\/figure>\n\n\n\n<p>Kiddie tax calculator for 2023 &amp; 2024 is a quick guide on the special rule for taxing a\u00a0<em>child&#8217;s unearned income<\/em>\u00a0if certain conditions are fulfilled. In other words, a child&#8217;s earned income, like wages, etc., suffers taxation the same as you or me, but if they have income from investments i.e., unearned income like capital gains, dividends, etc., a rule called Kiddie Tax will apply to such unearned income. Having child is an additional tax compliance burden, but there are tax benefits attached too! Have you tested our <a href=\"https:\/\/www.irstaxapp.com\/2022-child-tax-credit-calculator\/\">child tax credit calculator for 2022<\/a>.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_62 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6629145192de4\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6629145192de4\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.irstaxapp.com\/kiddie-tax-2023-calculation-made-simple\/#Kiddie_Tax_Calculator_2024\" title=\"Kiddie Tax Calculator 2024 \">Kiddie Tax Calculator 2024 <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.irstaxapp.com\/kiddie-tax-2023-calculation-made-simple\/#What_is_unearned_income\" title=\"What is unearned income?&nbsp;\">What is unearned income?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.irstaxapp.com\/kiddie-tax-2023-calculation-made-simple\/#When_does_the_Kiddie_Tax_rule_apply_to_a_childs_income\" title=\"When does the Kiddie Tax rule apply to a child&#8217;s income?\">When does the Kiddie Tax rule apply to a child&#8217;s income?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.irstaxapp.com\/kiddie-tax-2023-calculation-made-simple\/#Kiddie_tax_2024_2023_standard_deduction_exemption\" title=\"Kiddie tax 2024 &amp; 2023 standard deduction, exemption\">Kiddie tax 2024 &amp; 2023 standard deduction, exemption<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.irstaxapp.com\/kiddie-tax-2023-calculation-made-simple\/#How_is_kiddie_tax_computed\" title=\"How is kiddie tax&nbsp;computed?\">How is kiddie tax&nbsp;computed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.irstaxapp.com\/kiddie-tax-2023-calculation-made-simple\/#How_is_the_kiddie_tax_reported\" title=\"How is the kiddie tax reported?\">How is the kiddie tax reported?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.irstaxapp.com\/kiddie-tax-2023-calculation-made-simple\/#Is_AMT_Applicable_to_Childs_Income\" title=\"Is AMT Applicable to Child&#8217;s Income ?\">Is AMT Applicable to Child&#8217;s Income ?<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Kiddie_Tax_Calculator_2024\"><\/span>Kiddie Tax Calculator 2024 <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<iframe loading=\"lazy\" src=\"https:\/\/gsheetpress.com\/calculator?id=1674011959836\" name=\"calculator\" frameborder=\"no\" width=\"100%\" height=\"600px\" align=\"center\"><\/iframe>\n\n\n\n<p>The kiddie tax law was enacted (first became effective for tax years beginning after Dec. 31, 1986 ) vide&nbsp;<a href=\"https:\/\/www.law.cornell.edu\/uscode\/text\/26\/1\" target=\"_blank\" rel=\"noreferrer noopener\">section 1(g) of the Internal Revenue Code<\/a>&nbsp;to check the widespread diversion of income from parents to kids for availing exemptions and deductions.&nbsp;<em>The Tax Cuts and Jobs Act (TCJA) simplified the Kiddie Tax rules to a great extent by inserting a new provision &#8211; Sec. 1(j)&nbsp;<\/em>to the Internal Revenue Code.&nbsp;<strong><em>Sec. 1(j)(4) provides the new kiddie tax rules&nbsp;<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_unearned_income\"><\/span>What is unearned income?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is an income that is not earned but accrues to a person (Kid for this article ). The aggregate of this &#8220;unearned income&#8221; is taxed under &#8220;Kiddie tax &#8221; rules. The examples of unearned income can be as under:&nbsp;<em>&#8211;<\/em><\/p>\n\n\n\n<ul>\n<li><em>interest,<\/em><\/li>\n\n\n\n<li><em>dividends, or&nbsp;<\/em><\/li>\n\n\n\n<li><em>capital gains distributions, or<\/em><\/li>\n\n\n\n<li><em>taxable pension payments,<\/em><\/li>\n\n\n\n<li><em>rents,&nbsp;<\/em><\/li>\n\n\n\n<li><em>royalties, or&nbsp;<\/em><\/li>\n\n\n\n<li><em>Income from custodial accounts or property, even if the property was purchased with a child&#8217;s wages or given as a gift, or&nbsp;<\/em><\/li>\n\n\n\n<li>taxable social security benefits,&nbsp;<\/li>\n\n\n\n<li>taxable&nbsp;<\/li>\n\n\n\n<li>fellowship grants not reported on Form W-2,&nbsp;<\/li>\n\n\n\n<li>unemployment compensation,&nbsp;<\/li>\n\n\n\n<li>alimony, and<\/li>\n\n\n\n<li><em>Any other income not earned by working income from a trust unless it is a qualified disability trust.&nbsp;<\/em><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_does_the_Kiddie_Tax_rule_apply_to_a_childs_income\"><\/span>When does the Kiddie Tax rule apply to a child&#8217;s income?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Kiddie tax rules apply if conditions in the following&nbsp;four types of tests&nbsp;are satisfied. These are the age test, income test, filing test, and parents&#8217; alive test<\/p>\n\n\n\n<p><strong>(i) The Age Test:&nbsp;<\/strong>the child must satisfy one of the following two age conditions :<\/p>\n\n\n\n<ol>\n<li>They are below 18 years, or<\/li>\n\n\n\n<li>If the child&#8217;s earnings is less than 50% of their support, and they were:<\/li>\n<\/ol>\n\n\n\n<ul>\n<li>18,&nbsp;<strong>or&nbsp;<\/strong><\/li>\n\n\n\n<li>if a school student for at least five months during the year, then below 24 years&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"has-background\" style=\"background-color:#c7fde7\"><strong><u>What is the benchmark date for the computing age of the child?<\/u><\/strong> The Kiddie tax age is counted as on January 1 . Therefore, if a child is 18 years on 1st January, he is considered 18 years in the previous tax year ending on 31st December. For example, if a child turns 18 years on January 1, 2023, she is treated as 18 for the tax year 2022. Therefore, the kiddie rules may apply to her.<\/p>\n\n\n\n<p><strong>(ii) The Income Test&nbsp;<\/strong>&nbsp;is that the child must have unearned income (listed above)<\/p>\n\n\n\n<p><strong>(iii) The tax filing test:&nbsp;<\/strong>the kiddie tax does not apply in the following three circumstances :<\/p>\n\n\n\n<ol>\n<li>The child files a joint tax return or&nbsp;<\/li>\n\n\n\n<li>The child is not required to file a tax return, or&nbsp;<\/li>\n\n\n\n<li>The child&#8217;s parents both die by the end of the tax year.<\/li>\n<\/ol>\n\n\n\n<p><strong>(iv) Live parents test-<\/strong>&nbsp;At least one of the parents must be alive.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Kiddie_tax_2024_2023_standard_deduction_exemption\"><\/span>Kiddie tax 2024 &amp; 2023 standard deduction, exemption<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table has-medium-font-size\"><table class=\"has-black-color has-text-color\"><thead><tr><th>Tax <strong>Year(s)<\/strong><\/th><th>Standard<br>Deduction<br>for<br>Investments<\/th><th>Kiddie<br>Tax<br>Exemption<\/th><th>Max Std Deduction <br>if there is an<br>earned income<br><br><\/th><\/tr><\/thead><tbody><tr><td>2024<\/td><td>#1,300<\/td><td>$2,600<\/td><td>$14,600<\/td><\/tr><tr><td>2023<\/td><td>$1,250<\/td><td>$2,500<\/td><td>$13,850<\/td><\/tr><tr><td>2022<\/td><td>$1,150<\/td><td>$2,300<\/td><td>$12,950<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_is_kiddie_tax_computed\"><\/span>How is kiddie tax&nbsp;computed?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-black-color has-text-color has-background\" style=\"background-color:#e0fff3\">We have created an easy-to-use <a href=\"https:\/\/www.irstaxapp.com\/kiddie-tax-calculator\/\"><strong>Kiddie Tax <\/strong><strong class=\"\">Calculator<\/strong><\/a> along with details computation methods with examples. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_is_the_kiddie_tax_reported\"><\/span>How is the kiddie tax reported?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The law provides 2 methods to calculate and report the kiddie tax. One method is to report the child&#8217;s income on his own return by filing&nbsp;<strong><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f8615.pdf\" target=\"_blank\" rel=\"noopener\">Form 861<\/a>5<\/strong>, Tax For Certain Children Who Have Unearned Income.<\/p>\n\n\n\n<p> The other method is to include the child&#8217;s income on the parent&#8217;s return by filing&nbsp;<strong>Form 8814,<\/strong>&nbsp;Parents&#8217; Election to Report Child&#8217;s Interest and Dividends. which can be opted if your child&#8217;s only income is unearned income and that is not more than than $13,850 for 2023 ($12,950 for the tax year 2022), you may be able to elect to include that income on your return rather than file a return for your child. See&nbsp;<a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-8814\" target=\"_blank\" rel=\"noopener\">Form 8814, Parents&#8217; Election To Report Child&#8217;s Interest and Dividends<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_AMT_Applicable_to_Childs_Income\"><\/span>Is AMT Applicable to Child&#8217;s Income ?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A child is also subject to Alternate Minimum Tax (AMT) in that any unearned income over a certain amount for a child is subject to tax at the parent&#8217;s highest marginal rate. But as long as the child\u2019s income is subject to kiddie tax and the parents are subject to AMT, the kiddie tax rate is the AMT rate. A child to whom the \u201ckiddie tax\u201d rule applies, the tax year 2023 exemption amount for the Alternative Minimum Amount (AMT)  is <strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">equal to the sum of the child\u2019s earned income and $8,800.<\/mark><\/strong>Thus, the AMTI exemption amount for a child subject to the kiddie tax rules is the lesser of:<\/p>\n\n\n\n<ul>\n<li>the exemption amount available to a single taxpayer for the tax year (85700 for tax year 2024 ; $81,300 for tax years beginning in&nbsp;<a>2023<\/a> and)<\/li>\n\n\n\n<li>the sum of the child\u2019s earned income plus the inflation adjusted amount for the year ($9,250 for 2024; $8,800 for 2023;).<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Kiddie tax calculator for 2023 &amp; 2024 is a quick guide on the special rule for taxing a\u00a0child&#8217;s unearned income\u00a0if certain conditions are fulfilled. In other words, a child&#8217;s earned income, like wages, etc., suffers taxation the same as you or me, but if they have income from investments i.e., unearned income like capital gains, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7510,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[54],"tags":[1005,1006,1007],"amp_enabled":false,"_links":{"self":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts\/2238"}],"collection":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/comments?post=2238"}],"version-history":[{"count":7,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts\/2238\/revisions"}],"predecessor-version":[{"id":7593,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/posts\/2238\/revisions\/7593"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/media\/7510"}],"wp:attachment":[{"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/media?parent=2238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/categories?post=2238"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.irstaxapp.com\/wp-json\/wp\/v2\/tags?post=2238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}