Question

Karen, a single mom, claims her daughter Jill as a dependent. Her MAGI is $60,000. Jill is a sophomore at the local university and paid $5300 for tuition. Karen can take $4000 tuition and fees deduction on her federal return and a $4000 subtraction on her Oregon return. True or False?

Answer 1

The provided scenario analyses Susan's potential earnings and government support, addressing the 'poverty trap' issue and the influence of the Earned Income Tax Credit on her incentives to work.

Step-by-step explanation:

The original question about Karen claiming her daughter Jill as a dependent and the subsequent deductions is a tax-related inquiry, however, the provided information does not pertain to the Karen and Jill scenario.

Instead, it focuses on a different case with Susan, a single mother with three children, who is facing a trade-off between working and receiving government support. To address the scenario with Susan, a table can be created to illustrate the impact of her earnings from work on her government support and total income, shedding light on the concept of the "poverty trap" and the incentives or disincentives to work.

Government support reduction equivalent to her earnings, and the impact of the Earned Income Tax Credit (EITC) on her overall financial situation are two key points to consider. When constructing the table, various opportunity costs must also be taken into account.