Kiddie Tax Law and Legal Definition
Kiddie tax is a federal tax imposed on the unearned income of a child at the parents’ tax rate if the parents’ rate is higher and if the child is under 18 years of age. The kiddie tax only applies to unearned income and not to any income earned by the child through part time or full time employment. Unearned income includes stock and mutual fund dividends as well as interest payments.
