The kiddie tax applies to children, who have unearned income above $2,000 (for 2013 and 2014). Their tax rate is at their parents’ highest marginal rate rather than their own lower rate.

Children under age 18 or full time students under age 24 are subject to the “kiddie tax”. The instructions for calculating a kiddie tax liability are detailed in the Federal Form 8615 – Tax for Certain Children Who Have Unearned Income.