What Is the Kiddie Tax?

To prevent parents from loopholing taxes by transferring large gifts of stock for their 18 years of age or under—or dependent full-time studying children under age 24, the kiddie tax law is created in 1986. It is imposed on the unearned income over a determined annually specific threshold. In 2022, unearned earnings under $1,150 qualify for the standard deduction under kiddie tax law.

What Is the Kiddie Tax?