Question

Alan is a 23-year old student at Upper State College. He earned $4,200 at a summer job. I. Because he earns over $3,950 his parents cannot claim him as a dependent on their return. II. Alan cannot claim a personal exemption for himself if his parents can claim him as a dependent. a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

Answer 1

Alan's parents cannot claim him as a dependent on their return if he earns over $3,950. Even if his parents can claim him as a dependent, Alan can still claim a personal exemption for himself.Therefore, the correct answer is option a. Only statement I is correct.

Step-by-step explanation:

To determine whether Alan's parents can claim him as a dependent on their return, we need to consider two statements: I. Because he earns over $3,950, his parents cannot claim him as a dependent on their return. II. Alan cannot claim a personal exemption for himself if his parents can claim him as a dependent.

Statement I is correct. The IRS has a rule that states if an individual earns more than the threshold amount, which for 2020 is $4,200, they cannot be claimed as a dependent on someone else's tax return.

Statement II is incorrect. Even if Alan's parents can claim him as a dependent, he can still claim a personal exemption for himself if he meets certain criteria. However, the personal exemption has been suspended for tax years 2018-2025 due to changes in tax laws.

Therefore, the correct answer is option a. Only statement I is correct.