You are correct, if a child has a UTMA and makes $1,100 or less per year in unearned income such as stock profit, they don't need to file their own return.
But if a child makes between $1,101 and $2,200 in unearned income, the first $1,100 is tax-exempt (similar to our standard deduction), the rest is taxed at the child's tax rate, which is 10%.
And if a child's unearned income is over $2,200, the net unearned income (the unearned income - $2,200) is taxed at the parent's marginal tax rate.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
