If they are the owners of the accounts, the 1099-INTs should be in their name and Social Security number, and it is generally reported on their tax returns. They may not need to file returns if their income is below the filing
threshold.
An issue can arise if each grandchild's unearned income is more than $2100. In that case, they could be subject to the "kiddie tax" and their interest income could be taxed at their parents rate.
See the FAQ below for more information on the kiddie tax.
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