Investment withdrawn

I think you're referring to the Kiddie Tax. If they're over 18, and not in school, they should file their own tax return.

The tax applies to dependent children under the age of 18 at the end of the tax year (or full-time students younger than 24) and works like this:

• The first $1,150 of unearned income is covered by the kiddie tax's standard deduction, so it isn't taxed.
• The next $1,150 is taxed at the child's marginal tax rate.
• Anything above $2,300 is taxed at the parents' marginal tax rate.

If your child also has earned income, say from a summer job, the rules become more complicated. To learn more, see IRS Publication 9291.