February 12, 2020
The Tax for Certain Children Who Have Unearned Income that is reported on Form 8615 was changed in the Secure Act which was included in the 2020 Appropriations legislation enacted on December 20, 2019.
Effective for tax years beginning in 2020, the Kiddie Tax will revert back to the rules that were in effect before 2018. This means the tax on unearned income for certain children will be calculated based on the tax rate of the parent.
As part of this change, the legislation allows the Kiddie Tax to also be calculated using the tax rate of the parent if an election is made on Form 8615 for Tax Years 2018 and 2019.
Therefore, for Tax Year 2019 the Kiddie Tax may be calculated using the tax rates for estates and trusts or the tax rate of the parent - whichever is less. If the parent rate is chosen, they must make an election on Form 8615.
See the Form 8615 instructions in the “What’s New” section for more information.