filing tax for a dependent separately or not?

[kim_hung_lo]

My daughter is 20 years old and is a full time student. She has a small amount of unearned income (a few thousand dollars) in an UTMA account. When I file my tax return, is it better to put her income in my tax return as "Child Income" or to file her tax return separately? Also, I paid her tuition and education expenses from 529 account. The tax form is under her name, which made me think that I should file her tax separately. But I am not sure. If I am going to include her income in my tax return, I would think to report the 529 withdrawal also in my tax return. Can someone tell me which is a better way to do this?

[MarilynG1]

A child who earns $1,350 or more (tax year 2025) in "unearned income,” such as dividends or interest, needs to file a tax return.  If your child is required to file a tax return for unearned income, the IRS gives you the option of claiming the money on your return instead. There are certain restrictions, including a limit to the amount of money involved, and the tax you’ll owe may be greater than if your child filed an individual return, so you may want to test this in both returns.

Reporting the 529 distribution would not make a difference in either return, if funds were used for qualified expenses.

Here's more info on Reporting Dependent Income.

@kim_hung_lo