When a child's unearned income, primarily from investments, exceeds $1,700, the excess portion is generally taxed at custodial parent's highest marginal tax bracket. For 2007, this kiddie tax doesn't affect a child age 18 or older. However, beginning next year, the kiddie tax can hit a child up to age 23 if the child's earned (such was wages) income does not exceed one-half of his/her support.
