You should ask a fresh question, rather than tag on to an old one.
On the other hand, the simple answer to your question is: each child must a file a tax return if they have more than $1050 of total income.
If the child's only income is from interest and dividends, Alaska PFD or capital gains distributions shown on a 1099-DIV, there is a provision for entering it on the parent's (not the grandparent-custodian) return, using form 8814. In TurboTax, enter at Less common income / Child's income.
All 1099s have the recipient's SS# on them. Look again to see if the child or the grandparent is the "recipient" of the income.
