A
child's passive Income such as interest, dividends and capital gains
distributions (but not capital gains from the sale of stock) can be reported on
the parent's return, but they are just as easily (and correctly) reported on
your dependent's return, but only if he / she is required to file a return.
If the child has capital gains (other than capital gains distributions) and is required to file, the child must file their own return.
If
the child is not required to file a return, it does not have to be reported on
the child or parent's return and the amount escapes taxation. (If your dependent
made over $950 in passive income - such as interest and dividends - they are
required to file a return.)
