24211_ch04_final_p001-012

It is not necessary that it also be the taxpayers

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Unformatted text preview: taxpayer's home. A person for whom a dependency exemption is claimed solely because he or she lived in the taxpayer's home for the entire year or under a multiple support agreement cannot qualify the taxpayer as a head of household. A nonresident alien cannot be a head of household. (See Exhibit 4-3 and pp. 4-17 and 4-18.) 4-18 Yes. A person may qualify as a head of household by providing over one-half the cost of the home in which the taxpayer and his or her qualifying child live for more than one-half of the year. It is not necessary that a dependency exemption be claimed when the qualifying individual is qualifying child. For any other qualifying individual, a dependency exemption must be claimed. (See answer to Question 17 above and pp. 4-17 and 4-18.) In all cases except one, the home in which the qualifying individual lives must be the taxpayer's home. This one exception is when the parent(s) of the taxpayer is (are) the qualifying individual. (See answer to Question 17 above and pp. 4-17 and 4-18.) a. b. c. d. e. Yes. No. No. Yes. Yes. 4-19 4-20 (See pp. 4-18 and 4-19.) 4-21 a. M qualifies as an abandoned spouse. To qualify as abandoned spouse, the individual must provide more than half the cost of maintaining a home that houses him or her and a child for whom a dependency exemption deduction is either claimed or could be claimed by the taxpayer except for the fact that the exemption was assigned to the noncustodial parent. Here M provides 65 percent of the support of her son who she claims as a dependent. Thus, she may file as a head of household and claim two exemptions. M still qualifies as an abandoned spouse and could still file as head of household, but she would only claim one exemption. (See p. 4-18.) b. 4-22 Eligible taxpayers are required to use the tax tables. Ineligible taxpayers are those with taxable incomes in excess of $100,000 and those reporting on a taxable year of less than 12 months due to a change of accounting period. (See pp. 4-22 through 4-23.) a. In this case, W's standard deduction is $950 ($6,150 A.G.I. $5,200 taxable income). The standard deduction for someone who is claimed as a dependent by another taxpayer is limited to the greater of his or her earned income plus $300 or $950, but not to exceed $5,800 (2011 normal standard deduction). W's earned income is less than $650 ($950 $300) and the remainder is unearned income such as dividends and interest. (See Examples 25 and 26 and pp. 4-26 and 4-27.) In this case, W's standard deduction is $2,450 ($6,150 A.G.I. $3,700 taxable income). The standard deduction for someone who is claimed as a dependent by another taxpayer is limited to the greater of his or her earned income plus $300 or $950, but not to exceed $5,800 (2011 normal standard deduction). W's earned income is $2,150 ($2,450 $300) and the remaining $4,000 is unearned income. (See Examples 25 and 26 and pp. 4-26 and 4-27.) In this case, W's standard deduction is $5,800 ($6,150 A.G.I. $650 taxable income). The standard deduction for someone who is claimed as a dependent by another taxpayer is limited to the greater of his or her earned income plus $300 or $950, but not to exceed $5,800 (2011 normal standard deduction). Since W's standard deduction is the normal $5,800, at least $5,500 ($5,800 $300) of his 4-23 b. c. Solutions to Problem Materials 4-5 income is earned income. Therefore, no more than $750 ($6,150 $5,500 earned income)...
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This note was uploaded on 02/05/2012 for the course ACCT 110 taught by Professor Smith during the Spring '11 term at Adrian College.

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