Youngsters with investment income over $1,900 have special rules.  (Look at items like interest, dividends, and capital gains.)  Beyond the $1,900 limit the youngster must pay tax at the higher of his/her own tax rates, or those of parent(s).  Wealthy families cannot move income into a youngster’s lower tax brackets.  Normally this means both tax returns must be done at the same time.  Don’t let the student file his/her own return!

In the year when a youngster turns 24 things change.  Kiddie Tax rules disappear.  And, to claim the youngster as a dependent you face much tougher tests.