What is the “Kiddie Tax”?

Effective January 1, 2008, so-called “Kiddie Tax” rules pertaining to a child’s investment income were changed. The age limit for this tax increased to include children who are 18 or younger and full-time students over 18 but under age 24. Investment income greater than a specified annual amount¬†for a child affected by the kiddie tax is taxed at the marginal tax rate of the child’s parents.

Exceptions apply for children with paid jobs that provide a large portion of …