Kid's unearned income in 2025: Do the filing threshold rules change annually?

The unearned income filing threshold for dependents does adjust slightly each year with inflation. For 2025, you're correct that the threshold is $2,300. This means if your child's unearned income (dividends, capital gains, interest) is under $2,300, there's generally no filing requirement specifically because of that income. Looking at your numbers, each child has: $190 (Ordinary dividends) + $1,850 (Capital Gain Distributions) = $2,040 total unearned income Since each child's total is below the $2,300 threshold, you shouldn't need to file Form 8615 for them this year. Just remember that qualified dividends are already included in the ordinary dividends amount, so don't add those separately or you'll be double counting.

I just went through this exact situation with my teen's investment account. I was spending hours trying to figure it out when someone recommended I try https://taxr.ai to analyze the 1099 documents. You just upload the forms and it breaks down exactly what needs to be reported and why. The tool confirmed I didn't need to file Form 8615 this year because my kid's unearned income was under the threshold, but it highlighted that I needed to track the reinvested dividends to adjust the cost basis for future years. Saved me from making a mistake that could have caused problems down the road!

Just wanted to update that I tried the taxr.ai site that was mentioned earlier. Was skeptical, but it saved me a ton of confusion with my kids' investment accounts. I uploaded both the UTMA and trust 1099s, and it immediately broke down which income sources counted toward the $2,300 threshold. Turns out I was double-counting some income and didn't realize the qualified dividends were already included in the ordinary dividends total! Would have filed unnecessarily. The breakdown also showed exactly how to report the portion that will be on my return rather than filing separately for them. So much easier than last year's mess!

If you're still struggling with getting a straight answer about your kids' filing requirements, you might want to call the IRS directly. I know, I know - good luck getting through, right? I spent TWO DAYS trying to reach someone last April. Then I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 15 minutes. They have a cool demo video showing how it works: https://youtu.be/_kiP6q8DX5c The agent I spoke with went through the kiddie tax rules step by step and confirmed my understanding of the threshold changes. Totally worth it considering how much time I wasted trying to get through on my own.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I was desperate enough to try it anyway. Within 20 minutes, I was talking to an actual IRS tax specialist who confirmed that the kiddie tax threshold for 2025 is indeed $2,300 and walked me through exactly how to calculate my daughter's unearned income total. What would have been another week of frustration was solved in one conversation. The agent even emailed me the specific publication page that shows how the threshold adjusts each year. Honestly wish I'd known about this service months ago instead of playing the hold music game for weeks!

Just a quick heads-up that even if your kids don't have to file, you should still keep track of all reinvested dividends and capital gains distributions. These increase the cost basis of the shares, which will reduce the taxable gain when they eventually sell. I learned this the hard way when my son sold some shares last year and we had no records of reinvested dividends from the previous 5 years!

One thing to watch out for - the filing requirements can also be triggered if your child has earned income plus unearned income that together exceed the standard deduction (around $14,600 for 2025). My teenager had a summer job AND investment income, and even though neither would require filing on their own, the combination did. The tax software I was using completely missed this!

Great question! Yes, the filing thresholds do change annually based on inflation adjustments. For 2025, the unearned income threshold for dependents is $2,300, so you're absolutely right that your kids likely don't need to file this year. Looking at your numbers: $190 (ordinary dividends) + $1,850 (capital gains distributions) = $2,040 total unearned income per child. Since this is under the $2,300 threshold, no Form 8615 filing should be required. Just double-check that the $190 in ordinary dividends already includes the qualified dividends (it usually does on most brokerage statements), so you don't want to add the $165 qualified dividends on top of that. Also keep good records of any reinvested distributions for future cost basis calculations, even if you're not filing now. The IRS publishes these updated thresholds each year in Publication 929 if you want to bookmark it for future reference!