Children under 24 with investment income greater than $2,500 may be subject to tax.. This does not apply to children who are married and file a joint tax return with their spouse. The 2018 Tax Act changed the computation for the tax using trust and estate rates,. However, late in December, 2019, Congress repealed this rule and reinstated the prior law for tax years 2018-2025 and the tax is based on the parent’s individual tax rates if that rate is higher than the child’s. You may amend your 2018 returns if desired to elect this change.

The kiddie tax rules also apply where a child:

turns 18 or is a full-time student under age 24 before the close of the tax year
earned income for the year doesn't exceed one-half of his support (age 18 or a full-time student under age 24 only)
has more than $2,500 of unearned income
has at least one living parent at the end of the tax year
doesn't file a joint return

For tax years 2008 and later, the kiddie tax applies to a child under 18 even if the child's earned income exceeds half of his support.

Parents who elect to report a child's unearned income on their return may be subject to the Net Investment Income Tax because the child's income must be included in the parent's modified AGI.