Personal/Dependency Exemptions Flashcards Preview

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Flashcards in Personal/Dependency Exemptions Deck (15)
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1
Q

Personal Exemption

A

Personal Exemption = need to protect minimum amount of income from tax to support a taxpayer

2 Types of Personal Exemptions:

  1. Taxpayer (if Single Filing)
  2. Taxpayer & Taxpayer Spouse (if Joint Filing)

Dis-allowance of Personal Exemption = denied personal exemption if he/she qualifies as a dependent of another taxpayer

2
Q

Dependent Exemption

A

Dependent = A person who derives his/her primary support from another

2 Types of Dependents:

  1. Qualifying Child
  2. Qualifying Relative
3
Q

6 Qualifying Child Tests

A

6 Tests for Qualifying Child

  1. Relationship Test
  2. Residence Test
  3. Age Requirement
  4. (No) Joint Return Test
  5. Citizenship/Residency Test
  6. (Not) Self-Supporting
4
Q

5 Qualifying Relative Tests

A

5 Qualifying Relative Tests

  1. Support Test
  2. Gross Income Test
  3. Relationship/Member of Household Test
  4. Joint Return Test
  5. Citizenship/Residency Test
5
Q

Relationship Test (C)

A

Relationship Test for Qualifying Child

  1. Child (step, adpoted, foster)
  2. Sibling (step)
  3. Decendent of either
6
Q

Residence Test

A

Residence Test for Qualifying Child does not apply to Qualifying Relative

  • Same principal place of abode as the taxpayer for more than 6 months

(Easy for anyone living with the child > 6 months would meet this)

7
Q

Age Test

A

Age Test for Qualifying Child does not apply to Qualifying Relative

  1. < 19 years old at end of taxable year
  2. < 24 years old AND full-time student at end of taxable year
  3. Permanently disabled at any time of the year → no Age Test
  4. Child younger than taxpayer
8
Q

Self-Support Test

A

Not Self-Supporting Test for Qualifying Child does not apply to Qualifying Relative

  • The child cannot provide more than 1/2 of their own support

Total Support amount actually spent or expended on behalf of the person, income and funds available are ignored unless spent

(Scholarships are not counted)

9
Q

Support Test

A

Support Test for Qualifying Relative does not apply to Qualifying Child

  • Taxpayer must provide more than 50% of dependent’s total support

Total Support amount actually spent or expended on behalf of the person, income and funds available are ignored unless spent

(Social Security benefits & State Welfare Payments → included to extent spent)
(Non-Cash support is valued at fair market value)

10
Q

Gross Income Test

A

Gross Income Test for Qualifying Relative does not apply to Qualifying Child

  • Dependent’s Gross Income must be < 3950 (exemption amount)

(Gross Income is not always synonymous with includible gross receipts)

11
Q

Relationship Test (R)

A

Relationship Test for Qualifying Relative does not apply to Qualifying Child

  • Child or descendant of child
  • Sibling
  • Parent or ancestor of parent
  • Step father/Stepmother
  • Niece/Nephew\Aunt or Uncle
  • All the in-laws
  • Person who lives in taxpayer’s home/member of household for >1 year
12
Q

Joint Return Test

A

Joint Return Test For BOTH dependent must not file a joint return

(This test does not apply to qualifying child in order to be considered a widow)

13
Q

Citizenship Test

A

Citizenship Test for BOTH

  • US Citizen

OR

  • Resident of US, Canada or Mexico
14
Q

Multiple Support Agreement

A

Multiple Support Agreement can claim dependeyc for qualifying relative even if you don’t meet support test alone

  • No 1 person meets support test alone (>50%)
  • A group together meets the support test (>50% together)
  • Dependency Exemption goes to ssomeone who provides >10%
15
Q

Children of Divorced Parents

A

Children of Divorced Parents if together the parents provide >50% of child’s support, dependency exemption claimed by custodial parent

Custodial Parent parent with whom child resides for the greater part of the year

-Custodial parent can relinquish right to dependency bvy signing a form and granting it to the non-custodial parent

Non-Custodial Parent can be considered head of household because they have an unmarried qualifying child