Final answer:
The statement that children do not have to file a tax return when the kiddie tax applies because their income will be reported on their parents' tax return is false. Children may still need to file their own returns depending on their income levels.
Step-by-step explanation:
The statement suggesting that when the kiddie tax applies, the child need not file an income tax return because his or her income will be reported on the parents' return is false. The kiddie tax rules require certain amounts of a child's unearned income to be taxed at the parents' marginal tax rate. However, this does not necessarily mean the child is exempt from filing a tax return. Factors such as the amount and type of income determine whether the child needs to file a return or if the income can be reported on the parents' tax return. If the child's income exceeds certain thresholds, they may still be required to file their own tax return.