The grandchild's, assuming the account is under his Social security number.
You do not report his/her income on your return or the parent's return**. If it has to be reported
at all, it goes on his own return. He or she must file a tax return for 2016 if
he had any of the following:
1. Total income (wages,
salaries, taxable scholarship etc.) of more than $6,300 (2016).
2. Unearned income (interest,
dividends, capital gains) of more than $1050 (2016).
3. Unearned income over $350
and gross income of more than $1050
4. Household employee income
(e.g. baby sitting, lawn mowing) over $2000 ($6300 if under age 18)
5. Other self employment
income over $400, including box
7 of a 1099-MISC
Even if he had less, he is allowed to file if
he needs to get back income tax withholding. He cannot get back social security
or Medicare tax withholding.
He doesn’t get his own $4050 exemption
(deduction), when he files. In TurboTax, he indicates that somebody else can
claim him as a dependent, at the personal information section.
**If his 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 (or whomever claims him as a dependent) return, using form 8814. If he has capital gains on a 1099-B, you cannot use this method.
But, it is usually best for him to file a separate return, as qualified
dividends and capital gain distributions could be taxed at a higher rate on the
parent's return.
