A couple of more things:
As a dependent, with unearned income, he only gets an $1100 standard deduction. A non dependent gets the full $12,400. This means about $1200 more tax as a dependent.
As a non-dependent, his tax liability will not be large enough to get the full $1500 non-refundable portion of the AOC. It'll be about $600 less.
Net $600 in favor of being a non-dependent.
Q. Would the amount of tax that need to be paid be more if the parents claim the student dependent versus if they did claim the student ? And what if the student isn’t a dependent ?
A. It's gotten too complicated for a simple answer. It would be best to prepare taxes both ways (for both the parents and student) and compare results, before deciding. But, again, it is not optional. If he provided more than half his own support, in 2020, he cannot be your dependent. If he did not, and qualifies as your dependent, he is not allowed to file as a non-dependent.
Q. If my questions don’t make sense, please let me know!
A. Your new questions don't make sense.
-None of you dependent's income goes on your return, either way.
-Nothing about your dependent's income affects the calculations on your return. The only thing that affects your return is if he is claimed as a dependent or not.
-On his return, you do not "add the parents income". You only apply the parent's tax rate. There's only a 2% difference between your rate and his and it is only applicable to part of his income. The "kiddie tax" (about $150) gets applied whether he's a dependent or not; so it's not a factor in your decision.
