Question

Tami and her daughter jade lived all year with tamis mother, yasmin. yasmin paid the entire cost of keeping up the home. Tamis adjusted gross income was 12,000, and yasmin's AGI was 30,000. Jade meets the requirements of a qualifying childs dependent for both Tami and Yasmin. Yasmin would like to claim her grandaughter, Jade. As Yasmin's tax preparer, what information would you share with Yasmin?

Answer 1

Yasmin may be able to claim her granddaughter Jade as a dependent because she provided full support for the household and meets certain IRS requirements for doing so. However, she must consider IRS rules for 'qualifying child' and resolve any tie-breaker situations.

Step-by-step explanation:

As a tax preparer for Yasmin who wishes to claim her granddaughter Jade as a dependent, it's important to understand the rules regarding dependents for taxation purposes. In respect to the basic concepts of taxation, a dependent can typically only be claimed by one taxpayer. Since Tami and Jade lived with Yasmin the entire year and Yasmin paid the entire cost of maintaining the home, Yasmin may have the ability to claim Jade as a dependent provided she meets certain qualifying relative tests set forth by the IRS. It's also important to note that even though Tami's adjusted gross income (AGI) is $12,000 which is below the threshold that might entitle her to claim an exemption for a dependent, the higher AGI of Yasmin ($30,000) gives her a potentially better claim to the exemption as a supporting provider. The fact that Yasmin provided full support is substantial, indicating that she may be eligible to claim Jade, but Yasmin will need to ensure that claiming Jade aligns with the IRS rules concerning qualifying child and potential tie-breaker situations when two taxpayers have the potential to claim the same dependent.