Child's Unearned Income Filing and Higher Education Expenses Filing

[Schwarzbarte]

In the past, my son has only had unearned income in interest or dividends that we included in our own taxes each year.  However, this year he has a 1099-B as we used some investment income from his MUTA account to pay for his first semester of college in fall of 2020.  My understanding is that we must file his taxes separately now since it was more than just interest and dividends.  Can we still claim him as a dependent on our taxes as he is 18, a full-time student with no earned income in 2020 and we still pay most of his living expenses?  If so, do we claim the 1099-T tuition and fee expenses on our tax return or on the tax return that he files since he now has to do a separate filing for the 1099-B?

[MayaD]

Yes, from what you have mentioned, you can claim your son as a dependent. You will also  report form 1098-T on your return and you will claim the education credit if you qualify.

For more information please check Who can I claim as my dependent?

Your son needs to file a return if he has:

Earned income of at least $12,400, unearned income (like from investments or trusts) of at least $1,100, or self-employment income over $400.