Scholarzhip money invested in Stocks

[vvk4]

My son received scholarship money that he invested in stocks. When filing taxes for him, scholarship money is unearned income. He invested in stocks, and received dividends. In Turbotax iwhen I enter 1099 DIV in my sons tax return, it is asking information from parents tax returns, since child did not have earned income. How to handle this?

[Mike9241 · Accepted solution]

there are special rules for dependent children who have unearned income. since you state he has no earned income the following applies

he must file a return or the parents can include his unearned income on their return if his unearned income is over $1150 and

1) if married he  doesn't file a joint return and

2) one or both parents are alive at the end of the year and 

3) he's not over 23

if he files his own return form 8615 must be included. this requires the parent(s) to complete their return first

or the parents can include his unearned income on their return and include form 8814. parents filing might result in a greater total tax than the total if parents and child each file their own return. the basic advantage of the parent(s) including the child's income is only one return 

[vvk4]

Thank you very much Mike9241