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Sorry interest is always taxable.  Somebody has to pay the tax on it.  So they both have 7,000 of interest?  She  has to file a return for it and I think pay the Kiddie tax on it.   Turbo Tax article
https://ttlc.intuit.com/turbotax-support/en-us/help-article/small-business-processes/2021-kiddie-tax...