IRS Form 8615 Explained:

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Does your child earn interest from a savings account, receive dividends from investments, or have capital gains from selling stocks? If so, those earnings could affect the child’s federal income tax return. In certain circumstances, the IRS requires children to pay tax on some unearned income using their parent’s tax rate. This rule is commonly known as the kiddie tax.

For families in Grand Rapids, Kentwood, Wyoming, Middleville, and throughout West Michigan, understanding IRS Form 8615 can help prevent filing mistakes and unexpected tax bills.

AIM Financial helps individuals and families understand federal income tax requirements and prepare accurate tax returns. This guide explains what Form 8615 does, who may need to file it, and why parents should pay attention to their children’s investment income.

What Is IRS Form 8615?

IRS Form 8615 is officially called Tax for Certain Children Who Have Unearned Income. It is used to calculate the tax that may apply when a child’s unearned income exceeds the applicable threshold and the child meets the IRS eligibility requirements.

The kiddie tax rules are designed to prevent families from shifting investment income to children solely to take advantage of a child’s potentially lower tax rate.

For the 2025 tax year, the IRS generally requires Form 8615 when a child has more than $2,700 in unearned income and meets the other filing conditions. The threshold and requirements should always be checked against the instructions for the tax year being filed.

Official IRS resources are available at https://www.irs.gov/forms-pubs/about-form-8615.

What Counts as Unearned Income?

Unearned income is generally money received from sources other than performing work. It differs from earned income, such as wages from a part-time or summer job.

Common examples of unearned income include:

• Interest income: Interest earned on savings accounts, certificates of deposit, and other interest-bearing accounts.
• Dividend income: Payments received from stocks, mutual funds, and other investments.
• Capital gains: Profits from selling stocks, mutual funds, or other investment property.
• Trust income: Certain taxable income distributed to a child from a trust.
• Rental income and royalties: Certain income received from property or intellectual property.
• Other taxable income: Certain pension, annuity, or other payments that are treated as unearned income under the applicable rules.

For example, a teenager may work at a local business during the summer and earn wages. Those wages are generally earned income. If the teenager also has substantial interest and dividend income from investments, the unearned income may trigger additional tax reporting requirements.

Not every payment received by a child is taxable, and special rules can apply to scholarships and other income. The source and tax treatment of each payment should be reviewed before determining whether Form 8615 is required.

Who Must File Form 8615?

For the 2025 tax year, a child generally must file Form 8615 when all the applicable conditions are met:

1. The child has more than $2,700 in unearned income.
2. The child is required to file a federal income tax return.
3. The child meets the applicable age and financial-support rules.
4. At least one parent was alive at the end of the tax year.
5. The child does not file a joint return.

The age and support requirements are important. Generally, the rules cover children under age 18 at year-end, certain 18-year-olds who did not earn more than half of their own support, and certain full-time students ages 19 through 23 who did not earn more than half of their own support.

These rules can apply even if the child is not claimed as a dependent on a parent’s tax return.

Parents should not assume that a child is exempt from filing simply because the child is young, lives at home, or has only investment income. Each requirement must be evaluated under the applicable IRS instructions.

How Does the Kiddie Tax Work?

When the kiddie tax applies, a portion of the child’s unearned income may be taxed using the parent’s tax rate if that rate is higher than the child’s rate.

This does not mean that every dollar the child receives is automatically taxed at the parent’s rate. The calculation considers the child’s income, applicable deductions, and other tax rules.

For example, imagine a child receives dividends and interest from an investment account established by a family member. If the child’s unearned income exceeds the applicable threshold, the child may need to file a tax return and complete Form 8615.

The child’s wages from a part-time job are generally treated separately from investment income when calculating the kiddie tax. However, earned income can affect the overall filing requirement and the calculation.

Because the rules involve multiple calculations, families should avoid relying on a simple income estimate alone to determine the final tax owed.

Can Parents Report a Child’s Income on Their Own Tax Return?

In certain circumstances, parents may elect to report a child’s qualifying interest, ordinary dividends, and capital gain distributions on the parent’s federal income tax return using IRS Form 8814.

This election is subject to specific eligibility conditions. It is not available for every type of income or every child.

Parents should also compare the potential tax results before choosing this option. Reporting qualifying income on the parent’s return can sometimes result in a higher tax bill than filing a separate return for the child.

If the child has wages, income from a business, trust distributions, or other income outside the scope of the election, a separate tax return may be necessary.

AIM Financial can help families understand the available reporting options and determine which requirements apply to their circumstances.

Common Kiddie Tax Filing Mistakes

When preparing a child’s federal income tax return, watch for these common errors:

1. Ignoring investment income. Interest and dividends may be taxable even when a child does not have a job.

2. Assuming all income is earned income. Wages and investment income are treated differently under the kiddie tax rules.

3. Overlooking capital gains. Selling investments can create taxable gains and additional reporting obligations.

4. Using the wrong tax year’s threshold. Income limits and form instructions can change, so the correct tax-year guidance matters.

5. Choosing the wrong filing method. Parents should evaluate whether a separate return or a permitted Form 8814 election is appropriate.

6. Assuming a dependent does not need a return. A child can be claimed as a dependent and still have a separate federal filing requirement.

Get Help With Your Family’s Tax Returns From AIM Financial

Children’s tax returns can become complicated when investment accounts, dividends, stock sales, trust income, and the kiddie tax rules are involved. Proper reporting helps families avoid unnecessary confusion and understand their tax obligations.

AIM Financial provides tax preparation assistance for individuals and families seeking help with federal income tax returns and related reporting questions.

If you are searching for Grand Rapids tax preparation, Kentwood tax services, Wyoming, Michigan tax preparation, or tax assistance in Middleville and West Michigan, AIM Financial can help you discuss your family’s tax preparation needs.

Whether your child has a summer job, receives investment income, or has recently sold stocks, do not overlook the tax consequences. Organizing Forms W-2, Forms 1099, brokerage statements, and other income records before filing can make the process easier.

Contact AIM Financial today to discuss your family’s federal income tax preparation needs and get help understanding the rules that apply to your child’s income.

Disclaimer: This article is for general educational purposes only and does not constitute individualized tax, legal, or investment advice. Filing requirements and tax calculations depend on the child’s circumstances and the applicable tax year. Review current IRS guidance or consult a qualified tax professional for advice about your specific situation.