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Mangorange
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Posted: 01 Apr 2009 at 00:24 \| IP Logged

In Becker there's this MC:

Jim and Kay Ross contributed to the support of their two children, Dale and Kim, and Jim's widowed parent, Grant. For 20X4, Dale, a 19-year old full-time college student, earned $4,500 as a baby-sitter. Kim, a 23-year old bank teller, earned $12,000. Grant received $5,000 in dividend income and $4,000 in nontaxable Social Security benefits. Grant, Dale, and Kim are U.S. citizens and were over one-half supported by Jim and Kay, but none of the three reside with Jim and Kay. How many exemptions can Jim and Kay claim on their 20X4 joint income tax return?

Answer is THREE, Jim, Kay, and Dale. I understand why Kim doesn't qualify, but the only difference between Dale and Grant is that Dale earned $4500 and Grant $5000. Is this the difference that caused one to be included and the other not? So the exemtion amount happened to be >=$4500 but <=$5000 that caused Dale not satisfy the "U" of the SUPORT requirements of a dependent relative? This is a May94 question I think. Does this mean we need to remember the exemption amount? Hell what's the number for 2008? Anyone who can clarify this? Thanks.

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annoyings
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Posted: 01 Apr 2009 at 02:19 \| IP Logged

A dependent can be either a qualifying child or qualifying relative.

Qualifying child: son or daughter, (or many other relationships), under 19 at end of tax year (24 if full-time student or any age if disabled), lived with taxpayer for half the year (exceptions for temporary absences for school), who did not provide more than half of his or her own support.

Dale meets all of these requirements. Note there is no income limitation for a qualifying child, but the support test must still be met.

Qualifying relative: not a qualifying child, lived with taxpayer all year or is a relative not required to live with taxpayer (parents, siblings, many others), must have gross income less than $3,500 (for 2008), more than half support provided by taxpayer.

I believe the income limitation for being a qualifying relative is the same as the exemption amount for any given year. Whether in 1994 or 2008, Grant's gross income exceeded the limit to be a qualifying relative.

Best of luck on April 6th.

shalgo
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Posted: 01 Apr 2009 at 02:22 \| IP Logged

According to me Dale satisfied the CARES test and gross income test doesn't apply to qualifying child.Here's the explanation of CARES test-

C - Dale is taxpayer's son so close relative.

A- age limit for full time student is 24 so dale is under this limit.

R- dale is US citizen.

E- gross income test doesn't apply to qualifying child.

S- Support test is also satisfied.

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vennela
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Posted: 01 Apr 2009 at 08:22 \| IP Logged

Does this mean we need to remember the exemption amount? Hell what's the number for 2008? Anyone who can clarify this? Thanks.

U need to know the number which is $3500 for Tax year 2008

Is this the difference that caused one to be included and the other not ---- That is not the difference , no income limitation for qualifying child

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Mangorange
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Posted: 01 Apr 2009 at 20:57 \| IP Logged

Hi guys, thank you for your replies, I'm still confused.

To be a qualifying child, Dale has to meet the CARES test, but it seems he doesn't meet the R test according to what I see in Becker's book, where it says he must have the same principal place of abode as the taxpayer for more than half of the tax year.

Annoyings mentioned (exceptions for temporary absences for school), what does that mean? Why I don't see this in Becker??

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