Final answer:
The correct answer is option 5. The false statement concerning Adam, Lauren, and Jim's living situation is 'Lauren is a qualifying relative.' Lauren's age and student status suggest she might be a qualifying child instead, and age does not automatically disqualify Adam or Lauren from being claimed as dependents.
Step-by-step explanation:
Regarding the question concerning Adam and Lauren living with Lauren's father Jim in New York, the statement that is false is 'Lauren is a qualifying relative.' Lauren could be considered a qualifying child rather than a qualifying relative due to her age and student status, which allows her to be claimed until the age of 24 as long as she's a full-time student for at least five months of the year and lives with Jim for more than half of the year.
Jim can claim Adam as a dependent if he has lived with Jim for the entire year, is not a qualifying child of another taxpayer, and earns less than $4,300 in 2021 (the exemption amount is subject to change annually with tax law updates). Provided that Lauren meets the necessary criteria, Jim can claim her as a dependent as well. However, if Adam and Lauren file a joint tax return, Jim cannot claim them as dependents unless they are filing jointly only to claim a refund of withheld taxes and neither would have a tax liability if filing separately.
Statement number 5, 'Neither Adam nor Laura can be Jim's dependent under any circumstances because of their ages,' is incorrect since dependency doesn't rely solely on age but also on other dependency tests such as relationship, residency, support, and income. In this case, it would be incorrect to assume that solely due to their ages, they cannot be claimed as dependents.