@Mrbobwoj said " She also has $8600 in unearned income on a 1099-g specified as a taxable grant. "
What is the source and purpose of the grant? If it is essentially a scholarship, it is not fully treated as unearned income. Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $12,950 filing requirement and the dependent standard deduction calculation (earned income + $400). It is not earned income for the kiddie tax and other purposes (EIC. IRA contributions or additional child tax credit).
The trick is to get TurboTax(TT) to treat it as earned income for purposes of the standard deduction. Do not enter the grant at the 1099-G place, in TT. Instead, enter it in the educational expenses and scholarships section. After entering your 1098-T, you will be asked if you had any scholarships not included on the 1098-T. Enter there. When asked how much of the grant was used for room and board, enter the 1099-G amount. That makes it taxable (R&B is not a qualified expense). Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B.
