Do you have more than $350 in investment income, or other unearned income such as unemployment compensation? You may be subject to the "kiddie tax". This is designed to prevent parents from putting investments in their children's names to avoid tax by using their child's standard deduction and lower tax rates to pay less tax on those investments. The income tax you pay on unearned income is calculated based on your parent's income. The kiddie tax applies to all unearned income including investments, dividends and unemployment compensation.
Ok that makes sense because I did receive unemployment due to COVID this past year. Thank you!!
What if the person who claims me isn't my parent? I received unearned income and it wants my parent's information. Or because they claim me, does that make them my parent to the IRS?
Even if the person who claims you isn't your parent, the form still requires your parents' information.
Please see the IRS's Instructions for Form 8615 and the TurboTax Help article What is IRS Form 8615: Tax for Certain Children Who Have Unearned Income for more information.
Parent includes a stepparent, an adopted parent, or a foster parent, in addition to biological parent. Parent does not include a grandparent, or other adult you live with and who supports you.
Even if you don’t live with your parents, you must provide a parent‘s information for the kiddie tax as long as at least one of your parents is still alive. Generally, you should provide the information for the parent with the higher income. I took a quick look, and I can’t find any easy answer on what to do if a child is estranged from their parents and unable to provide the information. You may need to speak with a tax professional this year, if you can’t get the information.