Purpose is to keep low income taxpayers off the tax

Info icon This preview shows pages 5–7. Sign up to view the full content.

View Full Document Right Arrow Icon
purpose is to keep low-income taxpayers off the tax rolls. Increasing personal exemptions instead of the standard deduction would be bene fi cial to families with more dependents. Standard v. Itemized Deductions Where taxpayers have total itemized deductions each year that are reasonably close to the standard 6. deduction they may bene fi t by shifting deductions and placing as many of the itemized deductions in one year as possible. This will allow the taxpayer to itemize deductions for the one year and to use the standard deduction in another. This shifting will increase the total amount of deductions and reduce taxable income. Partial Standard Deduction Passive or unearned income can be placed in the hands of a dependent and taxed at lower rates. Special 7. rules reduce the amount of the standard deduction for dependents with unearned income. Married couples fi ling separately could arrange their affairs to have one of the spouses take all the itemized deductions while the other uses the standard deduction, and the result would be a smaller taxable income than if they fi led jointly. Special rules eliminate this possibility. Standard Deduction for Dependent Child with Unearned Income The standard deduction for a dependent child with unearned income is limited to the larger of the amount of 8. earned income plus $300 or $950. Spouse Exemption on Separate Return No. The spouse must have no income, earned or unearned, in order to be claimed as an exemption on 9. George’s separate return. Additional Old Age and Blindness Standard Deduction Taxpayers are allowed an additional standard deduction for being over age 65 or blind. The extra amounts 10. do not apply to dependents. Dependency Exemption: Support Test In determining whether a taxpayer has paid over one-half of the support of a dependent, the value of lodging 11. is determined using a marginal cost approach. A minimum base housing cost must be allocated to the taxpayer. The remaining or additional cost is then allocated to the dependent in the support determination.
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
36 CCH Federal Taxation—Basic Principles Chapter 3 © 2009 CCH. All Rights Reserved. Dependency Exemption: Birth and Death Bill and Becky are allowed a dependency exemption for the child. Birth during the year or death during the 12. year does not prevent an individual from qualifying as a dependent. Dependency Exemption: Full-Time Students Yes. School attendance exclusively at night cannot qualify as full-time attendance. Full-time attendance 13. may include courses taken at night. Attendance at night does not disqualify a person from meeting the full- time attendance requirement. Joint Return of Dependent Yes. Normally a dependent may not fi le a joint return and still qualify as a dependent of someone else. 14.
Image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern