Dependent

[nypreparer]

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.

[spanel]

Correct, gross income

[FEDUKE404]

Kinda makes you wonder how the tax returns for the significant other have passed IRS muster?

[Rapid Robert]

he CANNOT be a dependent because his gross income is over $5,050, correct? The net income is irrelevant.

I believe you can deduct cost of goods sold to arrive at gross income for a business.

[New York Enrolled Agent]

". 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.

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.

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.