Do I report the income of my 16 year old daughter whom 8 am claiming as a dependant?

if her unearned income  - taxable interest, dividends, capital gains - is over $1150 she must either file her own return using form 8615 which requires the parents to complete their return first because her tax is based on the parents taxable income + her own or the parents can include her income on their return by filing form 8814.

one advantage of parents filing on their return is that there's only one return to file. disadvantages possibly greater investment income tax and possibly higher tax on child's income.  filing one return and including her income may cost up to $115 in additional taxes then if she filed her own return.