Gross Income Test

This is another either/or test for dependent status. The dependent must either:

• be your child who is age 18 or younger, or age 23 or younger and a student, or
• have gross income that is less than the amount of the dependency exemption for the year, which means less than $3,900 for 2013.

Some definitions. The definition of "child" includes a stepchild, legally adopted child, or a child placed with you by an authorized agency for legal adoption. A foster child who was a member of your household for the entire year is also considered your child.

The child must meet the age requirement for the entire year. If the child was not a student, you don't meet the test for the year in which the child turns 19, even if the child was 18 for most of the year. For that year, the child must have income that is lower than the exemption amount or you'd lose the exemption.

The definition of "student" means a full-time student for some portion of at least five months in the calendar year. Therefore, you can usually count your child as a dependent for the year in which he or she graduates from school.

The school can be an elementary school; middle school; junior or senior high school; a college or university; or a technical, trade, or mechanical school. However, it can't be a correspondence school, night school, or an on-the-job training course (certain on-farm training courses are permitted, though). People who work in co-op programs that are part of the school's prescribed course of study are considered full-time students. Also, students who attend some classes at night as part of a full-time program are considered full-time students.

Income under $3,900. If the person is not your child under age 19 or a full-time student under age 24, the amount of income he or she received in 2013 must have been under $3,900.

You must count all the taxable income the person received during the year, whether in the form of money, property, or services. "Income" includes all unemployment compensation and the taxable portion of any pension income. However, it does not include gifts, support from you, or tax-exempt Social Security payments.

Also not included are scholarship funds used for tuition, fees, books, or equipment needed for school, or income received by a totally and permanently disabled person for working in a sheltered workshop.