Taxation of Minors

A free online guide

There are special rules, some for all dependent children, and others for children with investment income.

If your children have income, especially investment income, you may need to know the special rules that apply to their situation. The most frequently asked questions are answered on the following pages:

Tax Returns for Minors
When a minor child has income, who prepares the tax return? Who signs it? And who owes the tax? 

Standard Deduction and Personal Exemption for Minors
A minor who can be claimed as a dependent is not allowed to claim a personal exemption for himself or herself. The minor is allowed a standard deduction, but the amount depends on whether the minor's income is earned or unearned.

Minors Taxed at Parents' Rates: The Kiddie Tax
Children under 18 years of age (and some that are older, beginning in 2008) have to pay tax at the rate that applies to their parents' income if they have investment income above a threshold amount .

Reporting Your Child's Income on Your Return
Subject to limitations, you may be able to report income of a child under 18 years of age on your own income tax return.

Capital Losses of Minors
What happens if there is a capital loss in your child's custodial account, and your child doesn't have enough income to take advantage of the loss?