Taxation of Minors

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 Special Rates: The Kiddie Tax
Children under 18 years of age, and some that are older, have to pay tax at special rates if they have investment income above a threshold amount.

Reporting Your Child’s Income on Your Return
This choice may reduce or increase the amount of tax.

Capital Losses for 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?

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