Question

Determine the number of personal and dependency exemptions in each of the following independent situations based on 2017 tax rates (Show entire calculations please):

a. Leo and Amanda (ages 48 and 46, respectively) are married and furnish more
than 50% of the support of their two children, Elton (age 18) and Trista (age 24). During the year, Elton earns $4,500 providing transportation for elderly persons with disabilities, and Trista receives a $5,000 scholarship for tuition at the law school she attends.
b. Audrey (age 45) is divorced this year. She maintains a household in which she, her ex-husband, Clint, and his mother, Olive, live. Audrey furnishes more than 50% of the household’s support. Olive is age 91 and blind.
c. Crystal, age 45, furnishes more than 50% of the support of her married son, Andy (age 18), and his wife, Paige (age 19), who lives with her. During the year, Andy earned $8,200 from a part-time job. All parties live in Iowa (a common law state).
d. Assume the same facts as in part (c), except that all parties live in Washington (a community property state).

Answer 1

Solution and Explanation:

a) Two personal and two dependency exemptions

Personal exemptions for Leo and Amanda ($4050 multiply 2) = $8,100

Dependency Exemption = ($4050 multiply 2) = $8,100

Total = $16,200

For dependency exemption Elton and Trista are meeting all condition.

1) The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student,

2)The child must be son, daughter

3) Parents are furnishing more than 50% of the support of their two children b) Her ex husband Clint cannot qualify as he is not a member of Audry’s household and mother in law is qualified dependent as she mets the relationship test. one personal and one dependency exemptions

Personal exemptions for Audrey ($4050 multiply 1) =$4,050

Dependency Exemption = ($4050 multiply 1) =$4,050

Total = $8,100

c) One personal , 1 qualifying child and 1 qualifying relative

Personal exemptions for Crystal ($4050 multiply 1) = $4,050

Dependency Exemption = ($4050 multiply 2) = $8,100

Total = $12,150

Andy is a qualified child doesn't required to have gross income test.

Paige meets the gross income requirements of a qualifying relative.

d) One personal and 1 qualifying child

Personal exemptions for Crystal ($4050 multiply 1) =$4,050

Dependency Exemption = ($4050 multiply 1) =$4,050

Total =$8,100

Andy is a qualified child doesn't required to have gross income test. Paige doesn't meet the gross income requirements of a qualifying relative as in a community property situation, however, Paige is treated as having $4,000 in gross income.