If TurboTax is asking for your parents' income, it must be because you are subject to "kiddie tax." It's not just for kiddies. If you have unearned income, such as investment income, of more than $2,200, and you are not filing a joint return, then your unearned income over $2,200 is taxed at your parents' rate if any one of the following is true.
(1) You were under 18 at the end of 2021.
(2) You were 18 at the end of 2021 and your earned income (from working) is not more than half of your total support for the year.
(3) You were under 24 at the end of 2021, you were a full-time student, and your earned income (from working) is not more than half of your total support for the year.
It doesn't matter whether you live with your parents or not.
Obviously, in order to calculate the tax at your parents' rate, TurboTax needs information from your parents' tax return.
The tax at your parents' rate is commonly called "kiddie tax" from the days when it only applied to children under 14. The age limit has been raised to where it can apply to adult children who are still in school, but the name has stuck.
The kiddie tax applies to any "unearned income," not just investment income. Unearned income is basically any income that wasn't from working. It could be interest from a bank, Social Security benefits, or even unemployment benefits. Here's the definition of unearned income for kiddie tax, from IRS Publication 929, page 15. Although it's not mentioned in Pub. 929, taxable scholarship income is also considered unearned income for kiddie tax.
"Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed. It includes taxable interest, dividends, capital gains (including capital gain distributions), the taxable part of social security and pension payments, certain distributions from trusts, and unemployment compensation. Unearned income includes amounts produced by assets your child obtained with earned income (such as interest on a savings account into which you deposited wages)."
