Question

Joe, age 24, and Kelly, age 23, both of whom are students, live with Kelly's father, Richard. Richard provides more than half of the support for both Joe and Kelly. Joe has a part-time job in which he earns $8,000. The family lives in Texas, a common-law community property state. Which of the following statements is true?

1) Joe does not pass the gross income test.
2) Kelly is not a qualifying relative.
3) If Joe and Kelly file married filing jointly, Richard can claim neither of them as dependents.
4) Richard cannot claim Kelly as a dependent.
5) Richard cannot claim Joe as a dependent.

Answer 1

Jonathan and Susan's tables would illustrate the trade-off between work hours and government benefits, where every dollar earned reduces welfare benefits by one dollar, keeping the total income the same until earnings surpass the welfare amount. This helps students understand the economic decisions faced by individuals balancing work against available social support programs.

Step-by-step explanation:

The question involves creating a table to show the different levels of income Jonathan and Susan could receive based on the number of hours they choose to work and the government benefits they are eligible for.

With each dollar earned from work, their welfare benefits decrease by a corresponding dollar.

By constructing tables for Jonathan and Susan, students are practicing an important aspect of economic and financial education - understanding how employment income and government assistance interact.

To create a table for Jonathan, one would list in the first column the number of hours worked, in the second column the earnings from that work (calculated at $6 per hour), in the third column the adjusted government benefits after the earnings offset, and in the fourth column the total income.

Due to the welfare offset, Jonathan's total income remains the same regardless of hours worked, until the point where his earnings from work completely replace the welfare income. A similar approach is taken for Susan, but with different hourly rates and benefit amounts.