What Is the Gross Income Test for a Dependent?

The Internal Revenue Service (IRS) uses a set of dependency tests to determine if a taxpayer can claim an individual and receive certain tax benefits. One of these hurdles is the gross income test, which applies specifically when trying to claim a “qualifying relative.” This test establishes a maximum income threshold that a potential dependent can earn.

The Gross Income Limit

The gross income test sets a specific earnings limit for a person to be claimed as a qualifying relative. For the 2024 tax year, the potential dependent’s gross income must be less than $5,050. This figure is not static; the IRS adjusts it for inflation, meaning it can change from one year to the next. For the 2025 tax year, for instance, the amount is scheduled to increase to $5,200.

If an individual’s gross income is equal to or exceeds this annual threshold, they generally cannot be claimed as a qualifying relative, even if the taxpayer provides all of their financial support.

What Counts as Gross Income

For the purposes of this test, gross income includes all income an individual receives during the year that is not explicitly exempt from tax. This encompasses earnings in the form of money, as well as the fair market value of goods, property, and services.

Income to Include

When calculating a potential dependent’s gross income, you must include all taxable income sources. The taxable portion of Social Security benefits also contributes to the total. For a person receiving Social Security, it is necessary to determine what part of their benefits is subject to income tax. Other common sources are:

• Wages, salaries, tips, and other compensation for services
• Unemployment benefits
• Income from property, such as rent, royalties, dividends, and taxable interest
• Gains from the sale of property, like stocks or real estate

Income to Exclude

Certain types of income are specifically excluded from the gross income calculation. The non-taxable portion of Social Security benefits is a significant exclusion. Scholarships and fellowship grants used for qualified education expenses are not included, though amounts used for living expenses may be taxable. Other non-taxable income sources include:

• Welfare payments and other forms of public assistance
• Gifts and inheritances received by the potential dependent
• Interest from tax-exempt municipal bonds

Applying the Test in the Context of a Qualifying Relative

Passing the gross income test is just one of four requirements that must be met to claim someone as a qualifying relative. The other three tests are the Not a Qualifying Child Test, the Member of Household or Relationship Test, and the Support Test. Essentially, the person cannot be your qualifying child or the qualifying child of another taxpayer, must either live with you all year or be related to you in a specific way, and you must provide more than half of their total support for the year.

Consider a practical scenario where you are supporting your 68-year-old father who lives in his own apartment. During the year, he received $18,000 in Social Security benefits, of which only $4,000 is determined to be taxable. He also earned $1,000 from a part-time job and received a $500 cash gift from a friend.

To apply the gross income test, you would add his taxable income: $4,000 (taxable Social Security) + $1,000 (wages) = $5,000. The gift is not included. Since your father’s gross income of $5,000 is less than the 2024 limit of $5,050, he passes the gross income test. You would then proceed to evaluate the other three tests—relationship, support, and not a qualifying child—to confirm if you can claim him as a dependent.