DEFINITION of ‘Gross-Income Test’
One of the five necessary tests that dependents must pass before they can be claimed as such in the U.S. The gross-income test mandates that dependents cannot earn more than a certain amount of income each year. Furthermore, this test only applies to potential dependents that are over the age of 18 or over the age of 23 if the candidate in question is a full-time student.
BREAKING DOWN ‘Gross-Income Test’
The amount that a potential dependent can earn is indexed for inflation each year, and consequently fluctuates periodically. Since 2016, for example. the limit was $4,050, equal to the dependency exemption amount. This is a spike from the 2015 threshold of 4,000, and the 2008 limit of $3,500. Because periodically shifting number, it’s vital for individuals to make certain they base the test on the correct, up-to-date figure, before moving on the other four dependency tests. If an individual fails the Gross Income Test or any of the other…