Personal and Dependency Exemptions Flashcards Preview

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Flashcards in Personal and Dependency Exemptions Deck (27)
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1
Q

Can a dependent claim own personal deduction when another TP claimed him as a dependent?

A

No.

2
Q

What are 2 qualifying test for dependent?

A

Qualifying child or qualifying relative.

3
Q

Can a personal exemption be claimed if TP or spouse dies during the tax year? Where?

A

Yes.

On TP’s final tax return.

4
Q

When birth or death occurs during the tax year, what’s the portion of exemption can TP claim?

A

A full exemption is allowed.

5
Q

What are 6 tests for a qualifying child?

A

Relationship test, residence test, age test, joint return test, citizenship/residency test, not self-supporting test.

6
Q

What is relationship test? Is spouse a dependent? Exception?

A

Natural child, stepchild, adopted child, foster child, sibling, step-sibling, or a descendant of any of these (child, grandchild) - this include brothers, sisters, nieces, and nephews.
No.

If a married couple files separately and a spouse has no gross income and was not claimed as another’s dependent, the spouse can be dependent.

7
Q

What is residence test?

A

The dependent must have the same principal place of abode as the TP for more than one half of the tax year.

8
Q

What is age test?

A

The dependent must be less than 19 at the end of the tax year, or less than 24 if a full-time students for at least 5 months of the tax year. No age limitation if the individual is permanently and totally disabled.

9
Q

What is joint return test?

A

If the individual is married and files a joint return with the spouse, he can’t be claimed as a dependent, unless there is no tax liability on the return (he is filing to get refund).

10
Q

What is citizenship/residency test?

A

The individual must be a US citizen or resident, or a resident of Canada or Mexico.

11
Q

What is not self-supporting test?

A

To be claimed as a dependent, the individual must not have provided more than 50% of her own support.

12
Q

What is other requirement re: age of TP and the child? Re: parents decline?

A

The child must be younger than the TP.
If the parents qualify to claim him as a dependent, but declines, then no one else can claim him unless the new TP’s AGI is higher than the parents’.

13
Q

What does term “qualifying relative” include?

A

All common relatives except for cousins.

Also any person who lives in TP’s home for the entire tax year.

14
Q

What are 5 tests for qualifying relative?

A

Relationship test, support test, joint return test, citizenship/residency test, and gross income test.

15
Q

What is support test?

A

The TP must provide more than 50% of the total support.

16
Q

What is gross income test? What’s the definition of gross income?

A

The dependent’s gross income must be less than the exemption amount for the year.
Gross income: Only income that is taxable (i.e. social security benefit - non-taxable - don’t include in gross income test).

17
Q

What are 2 exceptions to gross income test?

A

If a child/step child (adopted and foster);

  1. that is less than 19 at the end of the tax year.
  2. that is less than 24 at the end of the tax year and is a full-time student for at least 5 months during the tax year.
18
Q

What does “support” include? What it doesn’t include?

A

Yes: Food, clothing, value of lodging, medical, education, recreation, and certain capital expenses.

No: Life ins premiums, funeral expenses, nontaxable scholarships, unused sources of funds of dependent.

19
Q

If no one person provides more than 50% of an individual’s support, but a group of individuals does, what is the tax option?

A

The group can file a multiple support agreement designating which person will claim the individual as a dependent.

20
Q

Multiple support agreement: what are 2 other criteria to use this option re: the person designated?

A

The person designated must;

  • provide more than 10% of the support for the individual.
  • meet the other dependency tests.
21
Q

Divorced parents: who gets the exemption?

A

The parent with custody (over half the year) in the absence of any written agreement.

22
Q

Divorced parents: can the custodial parent waive the exemption? How?

A

Yes by signing Form 8332 and non-custodial parent must attach this form to the return.

23
Q

Tie-breaking rules: who has the highest priority? If the TP declines?

A

Parents.

A TP who has higher AGI than any other person who qualifies.

24
Q

Tie-breaking rule: If both individuals are parents and they do not file a joint return? If even that is tie?

A

The parent with who the child resides longest.

The parent who has highest AGI.

25
Q

Tie-breaking rule: if none of TPs are parents?

A

TP who has the highest AGI.

26
Q

Phase-out: what is it? If the excess AGI is 2,501?

A

2% of total exemptions are lost for each $2,500 increment (or portion) above the threshold AGI.
i.e. 4% reduction.

27
Q

Phase-out: can TP still claim exemptions even if not eligible to receive the exemption?

A

Yes.