Kiddie tax Definition
Refers to the tax treatment that applies to children under the age of 14 who have investment income. Unearned income (dividends, interest, capital gains, etc.) of $700 or less is not subject to any tax. Unearned income of $700 to $1,400 would be taxed at the child’s rate, usually 15%. If a child’s unearned income is greater than $1,400 than this income would be taxed at the parents’ top tax rate.