Since this is below the dependent filing requirement of $1,350 in unearned income, it should not be reported on your tax return, per the IRS instructions for Form 8814. This isn't your income, so you don't have the right to the capital losses, in any case.
Review the dependent filing requirements separately for your state tax return instructions.
You'll want to review the custodial 1099's for any federal or state tax withholding, in which case you may file a tax return for them to receive a refund.
See TurboTax FAQ - What's the Kiddie Tax?:
The Kiddie Tax applies if your child:
- has unearned income (usually from investments) exceeding $2,700
- is required to file a return
- isn’t filing jointly
- is under age 18 (or under age 24 if a full-time student) as of January 1, 2026
How is Kiddie Tax calculated?
The Kiddie Tax only applies to unearned income in excess of $2,700.
- $0 - $1,350 isn't taxed.
- $1,351 - $2,700 is taxed at the child’s tax rate.
- Over $2,700 is taxed at the parents’ marginal tax rate.
Note that if the child has earned income in excess of the standard deduction (such as wages from part-time employment) they will be required to file their own tax return and include the UTMA investment income (the 1099's) on their own.
Learn more: IRS - Topic no. 553, Tax on a child's investment and other unearned income (kiddie tax)
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