What income is counted in the Gross Income Test for a qualifying Relative?

In the context of the Gross Income Test for a qualifying relative, taxable unemployment benefits are counted as income because they are considered taxable income by the IRS. The Gross Income Test is used to determine whether a relative qualifies as a dependent for tax purposes, and it requires that the individual's gross income for the year must be below a certain threshold. Taxable unemployment benefits directly contribute to this income calculation because they are not only reportable but also subject to income tax.

In contrast, the other choices involve forms of income that are either exempt from taxation or otherwise do not count toward the Gross Income Test. Tax-exempt scholarships, for example, are intended to support educational expenses and are not included in gross income. Exempt business income and non-taxable welfare payments also fall under the category of non-taxable income, and thus, they do not affect the calculation for the Gross Income Test. Only taxable income, such as unemployment benefits, is relevant for determining whether the individual meets the criteria to be considered a qualifying relative.