Please help me understand Pub 501 Table 2 Filing Requirements for Dependents

[crash345u]

I am trying to determine if my dependent daughter exceeds the income threshold for reporting a dependent's income per form 8962 Premium Tax Credit. Form 8962 worksheet 1-2 instructs "only include your dependents AGI who are required to file an income tax return because their income meets the income tax return filing threshold".

Using Hypothetical numbers for Pub 501 Table 2   (Dependents Filing information) 

Earned income = $1.00

Interest income = $401

Gross income =    $402

When I work thru Pub 501 Table 2 , it tells me that if my dependent earns any amount of money at all and has over $400 in interest, she MUST file a return and therefore must include that income into parents income for the purpose of determining houshold income for the Affordable Care Act. I'm having trouble wrapping my head around this, since she could have had Zero "Earned income" with $1000 in interest income and would NOT have to add this to parent's income for the ACA.

Am I understanding this correctly that she can't have any "earned income" at all if she has more than $400 in interest  in order to be excluded from houshold income? 

Pub 501 Table 2. 2022 Filing Requirements for Dependents

Single dependents—Were you either age 65 or older or blind? No. You must file a return if any of the following apply.

1. Your unearned income was more than $1,150.     $401 (NO)

2. Your earned income was more than $12,950.       $1      (NO)

3. Your gross income was more than the larger of:   $402 > $1 + $400   (YES)

   1. $1,150, or

   2. Your earned income (up to $12,550) plus $400.

[Bsch4477]

Number 3 answer is no since 402 is less than 1150.  She doesn’t have a filing requirement. 

[DMarkM1 · Accepted solution]

Item number 3 reads:  "More than the larger of..."  So in your scenario 3b = earned income $1 plus 400 for total $401 however that is not larger than 3a which is $1150.   

So she could have earned income up to $12,550 and unearned income below $400 and still not have to file.

[edited 2/6/2023 12:24pm PST]

[crash345u]

This response "So she could have earned income up to $12,550 and unearned income below $400 and still not have to file." was exactly what I was trying to understand! Thank you!