Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Joint Return Test

What it is:

The joint return test is used by the IRS to determine whether or not a taxpayer may be validly claimed as a dependent by another taxpayer. This test also determines whether or not a married taxpayer may file a joint income tax return with his or her spouse.

How it works (Example):

Taxpayers frequently claim other individuals (for example, children who are minors or disabled adult children) as dependents on their annual income tax returns. A married individual who is claimed as a dependent on another's tax return may not file a joint tax return with his or her spouse.

The IRS's joint return test definitively qualifies an individual as another's dependent for reporting purposes. For example, suppose Bob -- a married man -- is disabled and receives a sum of money each month from his father, Gene. For this reason, Gene wishes to claim Bob as a dependent on his own tax return. To find out if Gene has this option, the IRS runs a joint return test on Bob. If Bob passes the test, Gene may claim him as a dependent, leaving Bob and his spouse to file separate tax returns. If Bob does not pass the joint return test, Gene cannot claim him as a dependent, leaving Bob free to file a joint tax return with his spouse. 

Why it Matters:

The joint return test is a measure that prevents taxpayers from claiming undue exemptions. There are two circumstances under which a married individual may be claimed as a dependent and still file a joint return. The first is if both spouses file a tax return solely to receive a due refund and are not otherwise required to file a return. The second is if both spouses carry no joint or individual tax liability.

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...