In addition, the next $1,050 of investment income (also indexed for inflation) is taxed at the youngster’s tax rate. Note that only the amount of investment income matters, not how the child acquired the investment assets.

So, only after the child or grandchild has more than $2,100 of investment income in 2016 does the “Kiddie Tax” kick in, and Form 8615 doesn’t have to be filed until the youngster’s unearned income exceeds $2,100.