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Unformatted text preview: ption = $6,750) 0.10]. On her separate return, Kate would pay no tax [($950 $950 standard deduction in 2011) 0.10]. However, if Jim and Kate file jointly, they would pay $0 [($17,200 $11,600 standard deduction in 2011 $7,400 exemption deduction in 2011) 0.10], a savings of $675 [($675 $0) $0]. So the net savings that occur if the parents' claim an exemption for Kate is $250 ($925 $675). (See pp. 4-2 through 4-12 and tax rates inside front cover.) 4-37 The support test can be met using a multiple support agreement if the following tests are met: (1) no one person contributed over half of the support; (2) over half the support was provided by those who are qualifying relatives and (3) the citizenship, joint return and gross income requirements are met. If these tests are met, the exemption is assigned by agreement to a group member who contributed more than 10 percent of the total support. (See p. 4-7.) a. b. c. No one; no person provides more than 50 percent of G's support. A or B. Together, A, B, and C provide more than 50 percent ($4,600 of $9,000). C does not qualify because he provided less than 10 percent of G's total support. No one; together the group, A, B, and C, contribute less than 50 percent of G's support. (See Example 6 and p. 4-7.) 4-38 a. b. c. M, the custodial parent, is entitled to the exemption. M, the custodial parent, is entitled to the exemption. F, since the exemption was included in the divorce decree. (See p. 4-12.) 4-39 a. Head of household with a standard deduction of $8,500 in 2011. For 2008 M could file a final joint return with her husband who died during the year. For 2009 and 2010 she could have filed as a surviving spouse using the schedule for married persons filing jointly. A taxpayer qualifies as a surviving spouse if (1) his or her spouse died within two taxable years preceding the current year and (2) he or she provided a home for a dependent child (ignoring the gross income and joint return tests). For 2011, the best available filing status is head of household. A taxpayer qualifies as head of household if he or she is not married, does not qualify as a surviving spouse and provides more than one-half of the cost of maintaining his or her home as household that is the principal place of abode for more than one-half the year of a qualifying child or a dependent familial relative. For this purpose, a parent must be a dependent but need not live in the taxpayer's home. However the taxpayer still must pay more than half of the cost of keeping up a home for his or her mother or father. Similarly, a child of the taxpayer need not be a dependent. In addition, the individual cannot be a dependent because of a multiple support agreement. (See pp. 4-16 and 4-17.) Single and standard deduction in 2011 of $5,800. S would qualify as a head of household if he were entitled to the dependency exemption for his mother outright, rather than through a multiple support agreement. (See Exhibit 4.3 and pp. 4-17 and 4-18.) It may seem strange that S paid over half the cost of providing the home in which his mother lived, yet failed to provide over one-half the cost of her total support. This is entirely possible. Perhaps the siblings paid for medical care or had the mother in their homes for extended periods of time. S would have qualified as a head of household if he had also provided over one-half of his mother's support. b. 4-8 Chapter 4 Personal and Dependency Exemptions; Filing Status; etc. c. d. Surviving spouse and standard deduction o...
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- Spring '11