A new client came in and has always claimed her live in significant other on the return because his income is "so low". However, the significant other has a business that gross's over $100k. Unless I'm misunderstanding this, he CANNOT be a dependent because his gross income is over $5,050, correct? The net income is irrelevant.
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Correct, gross income -
Kinda makes you wonder how the tax returns for the significant other have passed IRS muster?Comment
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I believe you can deduct cost of goods sold to arrive at gross income for a business.Originally posted by nypreparer View Post
"You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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Gross receipts is not the same as gross income. RR is correct- Look at a Schedule C - line 1 versus line 7. Line 7 is the gross income.Originally posted by nypreparer View Post
Review Reg. 1.61-3 for the authority. If the gross receipts are over $100K, generally the gross income would likely be in excess of the $5,050 threshold but they are two different concepts.Comment
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