Other Dependent Credit

[easywind]

Does my son meet Other Dependent Criteria if his ADJUSTED gross income is $3,336.00 in 2019?  He had more than 4200.00 income if you include his Dividend income but he had a capital LOSS which reduced his adjusted gross to 3,336.00. 

[KathrynG3]

Yes, if certain criteria are met.

Click here for Who can I claim as a dependent?

Unearned income over $2,200 will require your son filing Form 8862 if you claim him as a dependent. The unearned income over $2,200 will be taxed in a different way.

Use this IRS Interactive Tax Assistant Guide to verify that he can be claimed as your dependent.

[Hal_Al]

You should be aware that  there are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit and the Child Tax Credit. They are interrelated but the rules are different for each.

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support. Scholarships are considered third party support and not as support provided by the student.
3. He lived with the parent (including temporary absences such as away at school) for more than half the year

A QC over age 16 only gets you the (up to) $500 other dependent credit, not the (up to) $2000 Child Tax credit.

[Hal_Al]

If your dependent is under 19, or under 24, if a full time student, he is subject to the "kiddie tax", where a child's investment income is taxed at the parent' tax rate. This  means he will have to file form 8615 (not 8862) because he has more than $1100 of investment income and more than $2200 total income. 

https://www.irs.gov/pub/irs-pdf/f8615.pdf

If his only income is from interest and dividends, Alaska PFD or capital gains distributionsshown on a 1099-DIV (unlikely if he has a capital loss), there is a provision for entering it on your return, using form 8814. Enter at Less common income / Child's income. Then he would not have to file a separate return of his own

[AmeliesUncle · Accepted solution]

No, you are not allowed to claim him as a dependent (as a Qualifying Relative).

Capital losses do NOT reduce his "gross income".

From IRS Publication 501 (the following statement is discussing non-dependents, but the same is applies for dependents):

Gross income includes gains, but not losses, reported on Form 8949 or Schedule D.

https://www.irs.gov/pub/irs-pdf/p501.pdf#page=2