Kiddie Tax - 0.2 CPE

Investment Income in a Child’s Name May Not Be Taxed at a Child’s Rate.

The kiddie tax rules were designed to prevent families from shifting investment income to children in lower tax brackets. When a child has sufficient unearned income, the IRS may tax part of that income at the parent’s higher marginal rate instead.

Understanding how the kiddie tax applies is essential for families using custodial accounts, investment accounts, or other wealth-transfer strategies.

Learning Objective

Distinguish between earned and unearned income for purposes of applying the kiddie tax rules.

Course Description

This nano-learning course reviews the kiddie tax rules, unearned income thresholds, filing requirements, and planning strategies affecting children and dependent students.

Designed For

Tax and accounting professionals advising families, dependent students, custodial account holders, or clients transferring investment assets to children.

Why This Course Is Important

Improper handling of a child’s investment income can unexpectedly trigger taxation at the parent’s marginal rate. Understanding the distinction between earned and unearned income, filing options, dependency tests, and Form 8814 considerations helps practitioners avoid costly filing errors and unintended tax consequences.

Author / Instructor

Lee T. Reams, Sr., BSME EA
Lee T. Reams, Sr. is an Enrolled Agent with extensive experience in tax preparation, representation, and advanced tax planning. He is known for helping practitioners apply complex tax rules in real-world client situations.

Course Details

This course qualifies for NASBA continuing professional education credit. CountingWorks, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

Understand How the Kiddie Tax Applies to Investment Income

Start Kiddie Tax and learn how earned income, unearned income, and dependency rules affect taxation for children and students.