At what income does a US-citizen child in the UK have to file a US tax return?

For 2025 returns, IRS Publication 501 requires a single dependent under 65 to file if unearned income was more than $1,350, if earned income was more than $15,750, or if gross income was more than the larger of $1,350 or earned income (up to $15,300) plus $450. Interest, dividends and gains from UK accounts are unearned income, and the amounts are adjusted each year.

What is the kiddie tax threshold on Form 8615?

For 2025, Form 8615 applies where a child required to file had more than $2,700 of unearned income and was under 18, or was 18, or was a full-time student aged 19 to 23, at the end of the year, with the older groups also needing earned income of no more than half their support. Unearned income above $2,700 is taxed at the parent's rate.

Is income in a Junior ISA taxable in the US for a US-citizen child?

In the returns we prepare, yes. GOV.UK confirms that dividends from shares in an ISA are free of UK tax, but the United States has no matching exemption for a UK ISA, so the interest, dividends and gains are reported on the child's US return. Because no UK tax is paid on the income, there is no foreign tax credit to offset the US tax.

Can a parent sign a US tax return for a child?

Yes. IRS Publication 501 states that if a dependent child must file but cannot because of age or another reason, a parent, guardian or other legally responsible person must file for the child. Where the child cannot sign, the parent signs the child's name followed by the words: By (your signature), parent for minor child. The return remains the child's own return.

Can a child use the Streamlined Foreign Offshore Procedures?

The IRS procedures do not exclude minors and do not mention them. A child who meets the non-residency test, has an SSN and whose failures were non-willful can submit three years of returns, six years of FBARs and Form 14653, with no penalty under the foreign procedures. In our practice a parent signs the certification for a minor, and the narrative explains the parents' conduct.

Does a child in the UK pay UK tax on savings and dividends?

Usually not. A child has their own UK Personal Allowance, and GOV.UK confirms that no tax is paid on dividend income within it, with a further dividend allowance of £500 a year and additional tax-free amounts for savings interest. Most children's investment income is therefore free of UK tax, which is exactly why the US tax on the same income is payable in full.

Missed US Tax Returns for a US-Citizen Child in the UK

Missed US tax returns for a US-citizen child with UK investment income are a filing failure in the child's own name, and in most of the families we see the tax is genuinely due: a dependent child had to file a 2025 return once unearned income exceeded $1,350, and unearned income above $2,700 is taxed at the parent's rate on Form 8615. The position is put right by preparing the child's own Forms 1040 for the open years, either through the IRS Streamlined Foreign Offshore Procedures or as ordinary late returns, with a parent signing for a child who is still a minor.

This is the gap we find most often in otherwise immaculate households. Two parents with a decade of complete US and UK filings, and a savings account and a share portfolio in each child's name that nobody ever thought of as a US tax matter. The UK side reinforces the blind spot, because the child pays no UK tax and receives no UK tax return, so nothing prompts the question.

Does a US-citizen child living in the UK have to file a US tax return?

Yes, if the child's income is above the filing threshold for a dependent. A US citizen is taxed on worldwide income whatever their age and wherever they live, and a child is a separate taxpayer from the parents. Income from a UK bank account, share account or fund holding in the child's name belongs on the child's US return, converted into US dollars.

The threshold is what catches families out, because it is far lower for a dependent than for an adult. IRS Publication 501 for 2025 returns, at www.irs.gov/publications/p501, sets out the filing requirements for dependents in its Table 2. A single dependent who is under 65 and not blind must file a 2025 return if any of the following applies:

Unearned income was more than $1,350.
Earned income was more than $15,750.
Gross income was more than the larger of $1,350, or earned income (up to $15,300) plus $450.

Unearned income is investment income: taxable interest, dividends and capital gains. For a child with no job, the first test is the only one that matters, and $1,350 of interest and dividends in a year is a modest sum against the balances commonly held for the children of high-earning parents. These are the 2025 figures. The amounts are adjusted from year to year, so each missed year has to be tested against the figure for that year rather than against today's.

Income that is tax free in the UK is not thereby tax free in the US. GOV.UK confirms at www.gov.uk/tax-on-dividends that no UK tax is paid on dividends from shares in an ISA, and the same is true of interest in a cash ISA, but the United States has no matching exemption for a UK ISA, so in the returns we prepare the interest, dividends and gains inside a child's Junior ISA are reported in full.

What is the kiddie tax on Form 8615 and which children does it apply to?

The kiddie tax is the rule that taxes a child's unearned income above a set amount at the parent's tax rate instead of the child's. It is calculated on Form 8615, Tax for Certain Children Who Have Unearned Income, which is attached to the child's own Form 1040. For the children of high earners it usually means the child's income is taxed at the top US rate that applies to the household.

The IRS instructions for Form 8615 for 2025, at www.irs.gov/instructions/i8615, require the form where all of these conditions are met:

The child had more than $2,700 of unearned income.
The child is required to file a tax return.
The child was under 18 at the end of the year, or was 18 at the end of the year, or was a full-time student aged at least 19 and under 24 at the end of the year, and in the last two cases did not have earned income of more than half of their own support.
At least one of the child's parents was alive at the end of the year.
The child does not file a joint return for the year.

The mechanics are worth understanding because they drive the information we need. The form takes the child's unearned income above $2,700 and works out the extra tax the parent would have paid if that amount had been added to the parent's own taxable income. The child's tax is then the larger of that parent-rate calculation and the tax at the child's own rates. Where parents file jointly, the joint return is used. Where they file separately, the instructions direct the child to the return of the parent with the greater taxable income.

Three practical consequences follow. The child's return cannot be finished until the parent's return for the same year is final. Qualified dividends and long-term gains keep their character, so they are taxed at the parent's capital gains rate, not as ordinary income. And the Form 8615 instructions note that a child whose tax is figured on the form may also be subject to the 3.8% net investment income tax, calculated on Form 8960, where the child's own income is high enough.

Can parents report the child's income on their own return with Form 8814?

Sometimes, but for families in the UK the election is unavailable or unhelpful more often than it is useful. Form 8814, Parents' Election to Report Child's Interest and Dividends, lets a parent include a child's income on the parent's return so that the child does not file at all. IRS Tax Topic 553, at www.irs.gov/taxtopics/tc553, lists the conditions. The child must be under 19 at the end of the year, or under 24 if a full-time student. The child's income must consist only of interest and dividends, which includes capital gain distributions. The child's gross income must be less than $13,500. No estimated tax payments may have been made in the child's name, no federal tax may have been withheld under the backup withholding rules, and the child must not file a joint return.

In the returns we prepare, the election falls away for one or more of these reasons:

The child sold something. A gain on the sale of shares or fund units is not interest or a dividend, so a single disposal in the year, including a switch between funds, takes the child outside Form 8814 for that year.
The income is too large. A portfolio producing $13,500 or more of gross income in a year is outside the election entirely.
It can cost more. The Form 8615 instructions themselves warn that the federal income tax may be higher when the parent makes the election than when the child files a separate return.
It pulls the child's accounts into the parent's Form 8938. The Form 8938 instructions at www.irs.gov/instructions/i8938 state that a parent who files Form 8814 has an interest in any specified foreign financial asset held by the child.
It is an election made year by year on the parent's return. For years already missed, using it means amending the parents' filed returns, which reopens returns that were otherwise correct.

Our practice, and it is our practice not an IRS rule, is to treat a child holding UK funds as needing a return in the child's own name, because the passive foreign investment company reporting that comes with those funds does not sit comfortably inside an election limited to interest and dividends.

Does the child need a Social Security number, and who signs the return?

The child needs a Social Security number before a return can be filed. A US-citizen child is eligible for an SSN, so an Individual Taxpayer Identification Number is not the route. Many children in fully compliant families already have one, because the parents needed it to claim the child as a dependent. Where a child born in the UK has never had one, the application to the Social Security Administration, described at www.ssa.gov/number-card, comes first, and in our experience it is the step that sets the timetable for everything else.

On signature, Publication 501 is specific. If a dependent child must file a return but cannot do so because of age or any other reason, a parent, guardian or other legally responsible person must file it for the child. If the child cannot sign, the parent or guardian signs the child's name followed by the words: By (your signature), parent for minor child. The return remains the child's return.

If the child pays no UK tax, is there any foreign tax credit?

Usually not, and this is why US tax is genuinely due rather than a paper exercise. The foreign tax credit, claimed on Form 1116, reduces US tax by foreign income tax the taxpayer has actually paid on the same income. Parents with heavily taxed UK salaries usually have ample credits. The child is in the opposite position.

A child has the same UK allowances as an adult. GOV.UK states at www.gov.uk/tax-on-dividends that no tax is paid on dividend income that falls within the Personal Allowance, and that there is in addition a dividend allowance of £500 a year. GOV.UK's guidance on savings interest, at www.gov.uk/apply-tax-free-interest-on-savings, explains the further tax-free amounts for interest and notes that interest in an ISA is not usually taxed at all. A child with no other income therefore uses the whole Personal Allowance against investment income, and for most children the UK tax bill is nil.

Nil UK tax means nil credit. The US tax on the child's income, calculated at the parent's rate above $2,700, is then payable in full. Where a child's income is large enough that some UK tax was paid, that tax is creditable, but only if it was actually paid and only against US tax on income in the same category, so the UK position for each year has to be established before the US return is prepared. The family's overall UK tax bill does not protect the children: the credit belongs to the taxpayer who paid the tax.

What about UK funds, the child's FBAR and Form 8938?

On funds the practical point is simple: most UK-domiciled collective investment funds, including the funds typically held in a stocks and shares Junior ISA, are passive foreign investment companies for US purposes, and each one generally requires its own Form 8621 with the child's return and is taxed under a regime considerably harsher than the one for directly held shares.

A child is also a US person for foreign account reporting. The IRS FBAR page at www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar confirms that an FBAR is required where the aggregate value of foreign financial accounts exceeded $10,000 at any time during the calendar year, and a child's own Form 8938 is only in point where the child has to file a return and holds assets above the much higher thresholds for taxpayers living abroad; our separate post on children's FBARs covers both in detail.

Missed US tax returns for a child: what are the routes to catch up?

There are two routes, and the choice turns on how many years are missing and what the accounts hold.

The first is the Streamlined Foreign Offshore Procedures, in the child's own name. The IRS sets out the terms at www.irs.gov/individuals/international-taxpayers/u-s-taxpayers-residing-outside-the-united-states. The submission consists of delinquent returns for the most recent three years for which the due date has passed, together with all required information returns, delinquent FBARs for the most recent six years, payment of all tax due with interest, and a signed Form 14653 certifying that the failures resulted from non-willful conduct. The IRS defines non-willful conduct as conduct that is due to negligence, inadvertence or mistake, or conduct that is the result of a good faith misunderstanding of the requirements of the law. A taxpayer who complies is not subject to failure-to-file, failure-to-pay or accuracy-related penalties, and the foreign procedures carry no offshore penalty. The submission is made on paper.

The child must meet the non-residency test personally: in any one of the most recent three years, no US abode and at least 330 full days physically outside the United States. A child at school in Britain normally meets it without difficulty. Penalty protection is lost if the original failure is later found to have been fraudulent or the FBAR violation willful.

The second route is to file the missing returns late in the ordinary way, with any late FBARs submitted through FinCEN's BSA E-Filing System with the reason for late filing. This suits a child with one or two missed years, cash accounts only and a small liability, since late-filing and late-payment penalties are calculated by reference to the unpaid tax. Where funds and Forms 8621 are involved, or where the missed years run back further than three, we generally prepare a streamlined submission for its penalty protection and defined three-year scope.

Who certifies non-willfulness for a minor?

The IRS has not published guidance on this point. The streamlined procedures page and Form 14653 are written for an adult taxpayer who signs the certification personally, and neither addresses a taxpayer who is a child. What the IRS has published is the general rule in Publication 501 that a parent or guardian files and signs for a child who cannot.

What follows is therefore our practice, and we flag it as such. For a child who is still a minor at the date of submission, we prepare Form 14653 in the child's name and with the child's SSN, signed by a parent in the same form as the returns: the child's name, then By (signature), parent for minor child. The narrative statement of facts is written about the parents' knowledge and conduct, because the child had none. The relevant facts are what the parents understood about the child's obligations, who opened and ran the accounts, what the family's preparer was told and asked, and how the omission came to light. We state on the face of the narrative that the parent is certifying on behalf of a minor and explain why.

What if the parents were fully compliant and only the children were overlooked?

The parents' own record helps: years of accurate returns and timely FBARs are strong evidence of a family that made a mistake about one narrow point. But it also invites the obvious question, namely why people who clearly knew about US filing did not file for their children. The narrative has to answer that honestly and specifically. The usual true answer is that the parents never understood a child to be a separate US taxpayer with a filing threshold a fraction of their own, and that the preparer's annual questionnaire asked about the parents' accounts, not the children's.

There is a second point that compliant parents rarely expect. The FBAR obligation extends to accounts over which a US person has signature authority as well as a financial interest. A parent who is the named account holder or signatory on an account held for a child may have had to list that account on the parent's own FBARs. So although the parents' income tax returns are usually unaffected, their FBARs for the same years may be incomplete, and we review them alongside the child's filings so that the household is corrected in one exercise.

What if the child turns 18 or leaves full-time education during the catch-up period?

Turning 18 changes who signs, not who is taxed at the parent's rate. Form 8615 continues to apply to an 18-year-old, and to a full-time student aged 19 to 23, unless their earned income is more than half of their own support. The age and student tests are applied separately at the end of each year, so a catch-up period can contain a mix: Form 8615 years while the child was at school and university, then a year taxed entirely at the child's own rates after leaving full-time education at 19 or older.

Signature and certification follow the child's status at the date of filing. The Publication 501 rule lets a parent sign where a child cannot. Once the child is an adult, it is our practice that the child signs their own returns and their own Form 14653, including for years when they were a minor. The narrative then has two voices: the adult child states truthfully that they had no knowledge of any US obligation, and the account of how the accounts were run during childhood is supplied by the parents and recorded as such. We do not have a parent sign for an adult child. A move to a US university also needs checking against the non-residency test, since time spent in the United States counts against the 330 days, although the test needs to be met in only one of the three most recent years.

Worked illustration: three missed years for a 14-year-old

The following is an illustration only, with invented figures and an assumed exchange rate of $1.30 to £1 for every year. A US-citizen child aged 14 lives in London with two US-citizen parents who file jointly and are fully up to date. The child has a savings account and a portfolio of directly held UK shares, both in the child's own name. Each year the accounts produce £4,000 of interest and £5,000 of dividends, a total of £9,000. No US return has ever been filed for the child. The child has an SSN.

UK position: we assume the £9,000 falls within the child's UK Personal Allowance, so no UK tax is paid and no UK return is required. US position: at the assumed rate the income is $5,200 of interest and $6,500 of dividends, $11,700 in total. That is well above the $1,350 dependent filing threshold for 2025, so a return was due. It is above $2,700, so Form 8615 applies, and $9,000 of the income is taxed at the parents' rate, with the dividends taxed at the parents' rate for qualified dividends if they qualify. There is no foreign tax credit because no UK tax was paid. The same analysis is repeated for each earlier year using that year's thresholds.

On these figures Form 8814 would technically have been open to the parents, since the income is only interest and dividends and is below $13,500. Now change one fact: in the middle year the child's portfolio sold a shareholding at a gain. For that year the election is unavailable, and the child must file. In practice we would prepare three Forms 1040 in the child's name, each with Form 8615, check the account balances against the FBAR threshold for the last six years, review the parents' own FBARs for the same accounts, and submit under the Streamlined Foreign Offshore Procedures with a parent signing for the minor.

What records do we need to prepare a child's late returns?

For each child and each year we ask for:

Annual interest statements and tax certificates for every bank and savings account, including cash Junior ISAs.
Dividend vouchers or consolidated tax statements for share and fund accounts, including accounts held by a parent as account holder for the child.
Purchase and sale records for every disposal, with dates and amounts, so that gains can be calculated in US dollars.
A list of every fund held, with identifiers, so that passive foreign investment company status can be determined holding by holding.
The highest balance of each account in each of the last six calendar years, for FBAR purposes.
The child's SSN, date of birth and, for those aged 19 or over, dates of full-time education.
The parents' filed US returns for the same years, which Form 8615 depends on.
A written account from the parents of how the accounts were opened and managed and what they understood about the child's US obligations.

Once the back years are filed, the child stays in the system: a return is prepared every year in which the threshold is exceeded, on the same timetable as the parents' return because the two are linked through Form 8615. Our work is tax preparation and compliance, and we prepare the child's returns, the kiddie tax calculations, the fund reporting, the FBARs and the streamlined submission alongside the parents' own filings.