Final answer:
The Hutters can claim a total of four exemptions on their Federal income tax return: two personal exemptions for themselves, and one dependency exemption each for Carla and Melvin. Aaron cannot be claimed as a dependent since he is not a U.S. citizen and does not live with the Hutters.
Step-by-step explanation:
The Hutters can claim personal and dependency exemptions for themselves and certain dependents on their Federal income tax return. Under the tax law applicable to 2017, a taxpayer could claim a dependent if the person was a U.S. citizen, national, or a resident of the United States, Canada, or Mexico; did not provide more than half of his or her own support; was not filing a joint return (unless that return was filed only to claim a refund with no tax liability for either spouse); and met certain relationship, age, and residency tests.
In this scenario, Carla, who is 18 years old, is a cousin earning $2,800 from a part-time job. Since she lives with the Hutters and they provide more than half of her support, she can be claimed as a dependent, assuming she meets the other dependency tests such as not providing more than half of her own support. Melvin, their 25-year-old son who is a full-time student, qualifies as well since the income from the scholarship is not considered earned income and he is under the age of 24 as a full-time student. However, Aaron, being a brother who is not a U.S. citizen or resident of the United States, Canada, or Mexico, and does not live with the Hutters, cannot be claimed. Therefore, assuming the Hutters also claim personal exemptions for themselves, the total number of exemptions they can claim is four: two personal exemptions for themselves, one dependence exemption for Carla, and one for Melvin.