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Taxation
Level 1

Are actor business expenses included in gross income?

In order to qualify my child as qualifying relative, they have to have less than $4,200 in gross income.  My child is an actor.  They have slightly over $4,200 in income, but if they deduct their business expenses, they have less than $4,200, which would qualify them as my dependent.  My question is, are actor business expenses included in gross income?  And would they qualify as my dependent?  And yes, I know what the IRS publication says...I just need more clarification pertaining to my particular situation.

1 Best answer

Accepted Solutions
Bsch4477
Level 15

Are actor business expenses included in gross income?

As @macuser_22 points out gross income is income before expenses are deducted. 

View solution in original post

4 Replies
Bsch4477
Level 15

Are actor business expenses included in gross income?

As @macuser_22 points out gross income is income before expenses are deducted. 

View solution in original post

macuser_22
Level 15

Are actor business expenses included in gross income?

Gross income includes all income from all sources that is not exempt from taxation such as some social security income and SSI income.     Deductions are then subtracted from gross income to arrive at  adjusted gross income to calculate the taxable income.

 

For self-employed persons gross income is line 7 of Schedule C.

 

  The $4,050 applies to gross income, not the AGI.

 

https://www.irs.gov/e-file-providers/definition-of-adjusted-gross-income

 

quote

Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Taxation
Level 1

Are actor business expenses included in gross income?

Line 7 on Schedule C is exactly what I needed to tell me what gross income would include or not include!

Carl
Level 15

Are actor business expenses included in gross income?

I think something may have been overlooked here.

In order to qualify my child as qualifying relative,

You refer to the dependent as "my child" yet reference the "qualifying relative" rules, instead of the "qualifying child" rules. Why?

Was the child under the age of 19 *or* under the age of 24 and a student on Dec 31 of 2019? If yes, it's more likely the child's earned income does not matter. There's other rules, but won't go into it until I understand the discrepancy in your comment in bold type above.

 

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