Joint Return Test

What Is the Joint Return Test?

The joint return test is one of the IRS tests that potential dependents must pass to be claimed as such by another taxpayer.

Significant

As per the IRS: "You generally can't claim a married person as a dependent if filing a joint return."

The joint return test specifies that no dependent can file a joint return with a spouse despite everything be claimed as a dependent on another person's return, like that of a parent or guardian. There is, in any case, an exception to this rule.

Since claiming dependents is important, the IRS foundations several tests, for example, the joint return test, to ensure that dependents aren't by and large twofold counted.

Understanding the Joint Return Test

As indicated by the joint return test, a taxpayer filing a joint return can be claimed as a dependent under only one condition: "that person and their spouse file the joint return just to claim a refund of income tax kept or estimated tax paid."

A taxpayer may not count somebody who is married and files their return with their spouse as a dependent, even assuming that that person brings in no money during the tax year and lives in the taxpayer's home assuming their spouse made taxable income reported on their joint return.

The IRS gives the accompanying model: "You supported your 18-year-old little girl, and she lived with you the entire year while her significant other was in the Armed Forces. He earned $25,000 for the year. Several files a joint return. You can't claim your girl as a dependent."

Another model: "Your 18-year-old child and his 17-year-old spouse had $800 of wages from part-time positions and no other income. They lived with you throughout the year. Nor is required to file a tax return. They don't have a child. No taxes were removed from your child's pay or his significant other's pay. In any case, they file a joint return to claim an American opportunity credit of $124 and have the money in question returned of that amount."

"Since claiming the American opportunity credit is their justification for filing the return, they aren't filing it just to have a fair amount of money returned of income tax kept or estimated tax paid. The exception to the joint return test doesn't make a difference, so you can't claim both of them as a dependent."

Joint Return Test for Claiming Dependents

The modern income tax was first presented in 1913, and a deduction for dependents was added to the tax code four years after the fact.

That Congress has supported a deduction for dependents for such a long time is an impression of its craving to support the option to have a large family, while as yet keeping up with the overall progressivity of the federal income tax system. The original income tax was very progressive, with just about the top 1% of incomes taxed. However, with that progressivity came a bias against large families, which generally require more income to support.

Congress has kept on supporting deductions for dependents from that point onward and made claiming dependents even more lucrative for certain taxpayers with its 2018 tax reform legislation.

Beginning in 2018, taxpayers who can claim a dependent younger than 17 will receive a tax credit of $2,000 per child, up from $1,000 beforehand. Further, Congress raised the income level at which the credit phases out. The credit currently starts to phase out at $400,000 of income for married couples and $200,000 for singles, compared with 2017 levels of $110,000 for married couples and $75,000 for singles. This benefit is a particularly important part of the tax code for some filers in light of the fact that the child tax credit is a dollar-for-dollar reduction of tax liability, as opposed to a deduction, which brings down taxable income.

Note that because of the American Rescue Plan of 2021, endorsed into law by President Biden, the limit on the Child Tax Credit, already $2,000, has been brought up to $3,000 for children ages six through 17 and $3,600 for children under six. The credit is likewise now completely refundable; already, just $1,400 was refundable. These changes are part of the American Relief Act of 2021 and are effective just for the 2021 tax year, except if extended by an extra act of Congress. It is phased out for singles with incomes above $75,000 and couples with incomes above $150,000.

Features

• One exception is in the event that neither the person you claim as a dependent nor their spouse made sufficient income to be taxable, however they filed a return to get repaid for wages held back.
• Much of the time, you can't claim somebody as a dependent who is filing a joint tax return with another person (generally a spouse).
• While choosing if somebody who has resided in your home that you have supported and who has not brought in any money is a dependent, you must apply the joint return test.