Gross-Income Test: What It Means and How It Works The gross-income test is one of the criteria used to determine whether someone can be claimed as a dependent for U.S. federal tax purposes. It limits how much income a potential dependent may earn in a year in order to qualify as a dependent (typically as a qualifying relative). Who the test applies to
* Primarily affects qualifying relatives. Qualifying children are subject to a different set of rules (including age and residency tests) and generally are not evaluated under this same gross-income threshold.
* The gross-income test is relevant for dependents who are over 19, or over 24 if they are full-time students.
* There is no age limit for someone to be a qualifying relative.
Annual threshold
* The gross-income limit is indexed for inflation and can change from year to year.
* Example: the limit was $4,300 in 2021. Always check the current IRS figure before applying the test.
What counts as gross income Gross income includes most money and non–tax-exempt property and services received. Common examples:
Wages, salaries, tips
Taxable Social Security benefits
Taxable unemployment compensation
Taxable scholarships and certain fellowship grants
Business income calculated as total net sales minus cost of goods sold, plus miscellaneous business income
Gross rental receipts
* A partner’s share of gross partnership income (but not a share of net profits) Explore More Resources
Common exclusions and special rules
* Legally obligated child support received by a child is not counted toward the gross-income test.
* Certain household situations, such as households with an elder or disabled member, may be subject to different rules or exceptions.
* Meeting the gross-income test is necessary but not sufficient—other dependency tests (relationship, residency, support, joint return rules, etc.) must also be satisfied to claim someone as a dependent.
Effect on the dependent’s return If someone is properly claimed as a dependent, they generally cannot claim a personal exemption on their own tax return for that same tax year. Key takeaways
* The gross-income test restricts the amount a qualifying relative can earn and still be claimed as a dependent.
* The dollar limit changes periodically, so confirm the current threshold.
* Accurately determine which types of income are included or excluded, and remember that passing this test does not alone establish dependency—other IRS tests must also be met.