I dont live with my parents and they dont claim me on their taxes. TT is making me put them down for unearned income tax bc im under 23. My parents dont want the money.

The issue is whether you qualify to be claimed by them, not whether they actually choose to do so or not. See:

What is the 2020 Kiddie Tax? (intuit.com)

Effects on Kiddie Tax if my parents claim me this ... (intuit.com)

Yes, kiddie tax or Form 8615 is filed for dependent child 18 and under 24 years old with unearned income over $2,200.  The qualified dependent living away from home due to child's education is considered as living in the hosuehold and can be claimed on parent's return.  The Form 8615 must be attached to 2020 1040 federal income tax return.

@JoannaB2  I am still confused. I live with my grandparents full-time. My parents pay nothing for my housing, food, or any of that, my grandparents do it all. Should I then put my grandparents down as the Head of Household in the 8615 form? Or do I still have to put my parents down?

Being a dependent and filing Form 8615 are two completely different things. Your grandparents may or may not claim you but you have to file Form 8615 with your parents' information. You need to get this from their tax return.

 

Your grandparents may claim you if you meet one of these categories.

 

Qualifying Child

 

Relationship — the taxpayer’s child or stepchild (whether by blood or adoption), foster child, sibling or step-sibling, or a descendant of one of these.

Residence — has the same principal residence as the taxpayer for more than half the tax year. Exceptions apply, in certain cases, for children of divorced or separated parents, kidnapped children, temporary absences, and for children who were born or died during the year.

Age — must be under the age of 19 at the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year, or be permanently and totally disabled at any time during the year.

Support — did not provide more than one-half of his/her own support for the year.

 

 

Qualifying Relative

You can claim a child, relative, friend, fiancé (etc.) as a dependent on your 2020 taxes as long as they meet all of the following requirements :

• You provided more than half of their financial support. More info
• They made less than $4,300 in gross income during 2020 unless they are a qualifying child.
• They live with you or they are related to you. (Your relative must live at your residence all year or be on the list of “relatives who do not live with you” in Publication 501.) 
• They are a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
• They aren't (or won't be) claimed as a dependent by someone else.
• They aren’t filing a joint return with their spouse.
• You are not being claimed as a dependent on someone else's return.

 

 

 

 

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@falyn-clements wrote:

@JoannaB2  I am still confused. I live with my grandparents full-time. My parents pay nothing for my housing, food, or any of that, my grandparents do it all. Should I then put my grandparents down as the Head of Household in the 8615 form? Or do I still have to put my parents down?

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The "Kiddie tax" doesn't provide your parents any benefits.  What it does is to tax your income at a higher rate than normal, based on your parents' income.  The idea is to prevent parents from hiding income and avoiding tax by putting investments in their children's names.  The kiddie tax applies to unearned income (income not earned from working) like investments, scholarships more than tuition, and unemployment compensation.   Unfortunately, if you are under age 24, a full time student, at least one parent is alive, and don't pay more than half your own expenses, you are subject to the Kiddie tax, and it's based on your parent's income.  It doesn't matter if you live with another relative or are separated from your parents, the law that created the kiddie tax doesn't allow for those kinds of special circumstances.  If your parents are alive, your tax is based on their information, even if you don't have a relationship with them.

https://ttlc.intuit.com/community/income/help/what-is-the-kiddie-tax/00/25913

 

If you are subject to the Kiddie tax and don't know your parent's income, the IRS says to estimate.

 

This is all separate from the issue of who could, or should claim you as a dependent.  But the kiddie tax requires a parent's information only, because of how the law is written, even if you are a dependent of your grandparents. 

 

This only applies if you were a full-time student.

 

The Kiddie Tax is the tax levied on the portion of your child's unearned income that exceeds $2,200. Children who only had earned income from a job or self-employment, don’t make enough money to be required to file, or are filing jointly with their spouses are exempt from the Kiddie Tax.

When does the Kiddie Tax kick in?

For tax year 2020, the Kiddie Tax applies if your child has unearned income (usually from investments) exceeding $2,200, is required to file a return, isn’t filing jointly, and was age:

• 17 or younger at the end of 2020;
• 18 at the end of 2020, but only if their earned income (excluding scholarships in the case of a full-time student) didn’t exceed half of their support costs in 2020; or
• 19–23 at the end of 2020, but only if they were full-time students and their earned income (excluding scholarships) didn’t exceed half of their support costs in 2020.