Let’s look at the rules for when a dependent needs to file a tax return. For reference, see Table 1-2 on page 7 of this year’s IRS Publication 17.
In tax terminology, the phrase “tax benefit rule” refers to whether or not a refund or recovery received in a future year is taxable. For example, whether or not a state income tax refund is taxable on your federal return depends on the “tax benefit rule.”
Let’s look at things that could be considered “hidden” marriage penalties.