Yes, the $2500* LT capital gain (unearned income) will trigger a filing requirement for your student-dependent. If the gain (plus any other unearned income like interest and dividends) is less than $2600, the kiddie tax (form 8615) will not be triggered. He will not owe any tax**, but still has to file. TurboTax (TT) can handle this, but not in the free edition.
*In his case, rule #3 applies.
If your dependent child is under age 19 (or under 24 if a full time student), he or she must file a tax return for 2023 if he had any of the following:
- Total income (wages, salaries, taxable scholarship etc.) of more than $13,850 (2023).
- Unearned income (interest, dividends, capital gains, unemployment, taxable portion of 529 distribution) of more than $1250 (2023).
- Unearned income over $400 and gross income of more than $1250 (2023)
- Household employee income (e.g. baby sitting, lawn mowing) over $2600 ($13,850 if under age 18)
- Other self employment income over $432, including money on a form 1099-NEC
**The standard deduction (earned income + $400) wipes out his wages and the LTCG is taxed at 0%, if the kiddie tax does not apply.
