Capital gains are unearned income. A dependent generally needs to file their own 2020 tax return if:
- Their earned income (money you made by working) exceeds $12,400
- Their unearned income (interest, dividends, capital gains, etc.) exceeds $1,100
- Their business or self-employment net income (gross minus expenses) is at least $400
- Their gross income (earned plus unearned) exceeds the larger of $1,100 or your earned income (up to $12,050) plus $350
If your dependent child made less than $1,100 in interest, dividends, and capital gains distributions combined, and that was their sole source of income, the child's income doesn't need to be reported on any tax return. @PB11
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