Gross-Income Test

AAA

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 each year. This test only applies to potential dependents that are over the age of 18 (or 23 if he or she is a full-time student).

INVESTOPEDIA EXPLAINS 'Gross-Income Test'

The amount that a potential dependent can earn is indexed for inflation each year. For 2008, the limit was $3,500, equal to the dependency exemption amount. If this criterion is met, the other four tests for dependency are then applied.

RELATED TERMS
  1. Income

    Money that an individual or business receives in exchange for ...
  2. Relationship Test

    One of several tests that a person must pass in order to be claimed ...
  3. Child Tax Credit

    A credit given to taxpayers for each dependent child that is ...
  4. Dependent

    An individual whom a taxpayer can claim for credits and/or exemptions. ...
  5. Gross Income

    1. An individual's total personal income before taking taxes ...
  6. Total Revenue Test

    A test that approximates the price elasticity of demand by comparing ...
Related Articles
  1. Taxes

    Next Season, File Taxes On Your Own

    Master these fundamentals and you'll be doing your own taxes with minimal stress.
  2. Taxes

    Avoid The Social Security Tax Trap

    Government benefits can cost you big money! Know the income thresholds before you file.
  3. Taxes

    An Overview Of Itemized Deductions

    Not taking the standard deduction this year could save you hundreds of dollars.
  4. Retirement

    Too Much Debt For A Mortgage?

    Just because a lender is willing to offer you a loan doesn't mean you should take it.
  5. Taxes

    What is Value-Added Tax (VAT) and who pays it?

    Learn about the definition of value-added tax, the necessary circumstances that require a business to pay it and when a business is exempt.
  6. Taxes

    What is the difference between gross income and earned income?

    Being able to distinguish between earned income and gross income is an important tool in preparing for and filing your individual tax returns each year.
  7. Taxes

    How much will it cost to hire an accountant to do my taxes?

    Find out how much it costs to hire an accountant and what benefits and services you can expect from your accountant.
  8. Taxes

    Federal Tax Brackets

    Why do we have income tax brackets? What do they do for us? Read this to understand the basics and where to find your own bracket.
  9. Taxes

    After-Tax Balance Rules For Retirement Accounts

    Accumulating post-tax assets can work to your advantage. Find out how.
  10. Taxes

    Changes In Tax Legislation And Regulation

    Keeping on top of these amendments can help you avoid penalties and take advantage of benefits.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center