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If your child is under age 14 and has over $2,100 of unearned income (interest, dividends, capital gains, etc.) then part of their income will be subject to the "kiddie" tax. The kiddie tax is calculated on Form 8615 if your child files his or her own tax return and is calculated on Form 8814 if you report your child's income on your own tax return.
If your child has less than $1,050 in unearned income, then no tax return needs to be filed for the child and nothing need to be reported on your tax return. If your child has more than $1,050 in unearned income you can either report the child's income on your tax return by using Form 8814 or you can file a separate tax return for your child and use Form 8615. If you use Form 8814, your child will not have to file a return.
Form 8615 Tax Tips
Filing a tax return for your child and using Form 8615 often saves more in overall taxes than using Form 8814. If you have items on your tax return that are affected by adjusted gross income such as IRA deductions and itemized deductions, then using Form 8814 and adding your child's income to your tax return could reduce your IRA deduction or itemized deductions.