Chapter 4: Dependent Exemptions And Support

Front 1

What are the four requirements that must be met to be claimed as a dependent?

Back 1

-Dependent must be a qualifying child or qualifying relative
-Taxpayer claiming the dependent must not be a dependent
-If married, a person cannot usually be claimed as a dependent if he/she files a joint return with his spouse
----------Neither are required to file; no tax liability; filing only to get a refund
-Must be a U.S. citizen or a resident of the United States, Canada or Mexico

Front 2

What is the exemption amount for dependents on a return?

Back 2

$3650

Front 3

What are the six tests for a qualifying child?

Back 3

Relationship, residency, age, support, joint return and the special test

Front 4

How is the relationship test met?

Back 4

Must be taxpayer’s son or daughter (biological, adopted, or step), eligible foster child, brother or sister (biological by blood or half-blood, adoptive or step) or a direct descendant of any of these (grandson, granddaughter, great-grandson, great granddaughter, nephew, niece, grandnephew, grandniece, etc…)

Front 5

Define an eligible foster child?

Back 5

A child placed in the taxpayer’s home by a government-authorized placement agency or by court order, decree or judgment

Front 6

How is the residency test met?

Back 6

The person must share the same principal place of abode (except for certain temporary absences) for more than half the year

Front 7

How is the age test met?

Back 7

The person must not have reached age 19 (age 24 if a full-time student) by the end of the year or
Permanently and totally disabled (any age)

Front 8

Define full-time student, for purposes of the age test?

Back 8

A student attending school on a full-time basis (as defined by the school) for some part of at least five months of the year

Front 9

How is the support test met?

Back 9

The qualifying child cannot provide more than 50% of his own support

Front 10

How can a married individual meet the joint return test to remain a qualifying child?

Back 10

Either not filing a joint return with their spouse or filing a joint return only to claim a refund of any taxes withheld

Front 11

What are the four tests to be considered a qualifying relative?

Back 11

Relationship or member of household, gross income, support, and not a qualifying child

Front 12

How can the gross income test be satisfied?

Back 12

The qualifying relative’s gross income must be less than $3650 for 2009

Front 13

What is gross income?

Back 13

Total worldwide income that is subject to tax and not specifically exempt or excluded by law

Front 14

How can the support test be satisfied?

Back 14

The taxpayer must provide over 50% of the qualifying relative’s support

Front 15

For a qualifying relative of a taxpayer to also be a dependent of the taxpayer, what other conditions must be met?

Back 15

-The taxpayer can’t be a dependent
-The qualifying relative can’t file a joint return unless there’s no tax liability for either spouse and only filing to claim a refund
-Must be a U.S. citizen, or U.S. national or a resident of Canada or Mexico

Front 16

Can a taxpayer’s parent ever be a qualifying relative?

Back 16

Yes. The relationship test is met and if they meet all other tests, they can be claimed as a QR on the taxpayer’s return.

Front 17

What are the some items that count as support?

Back 17

Lodging, clothing, haircuts, personal items, capital items, food, etc.

Front 18

Under what circumstances might you have to determine who paid more than 50% of a qualifying relative’s support?

Back 18

When support is received from multiple sources, such as other relative’s, government programs, and the dependent’s own income

Front 19

When computing support, how do we determine the value of lodging?

Back 19

Fair rental value. What a similarly furnished house or apartment would rent for.

Front 20

What are some items not included in support?

Back 20

Capital items purchased for general household use, taxes paid from the dependent’s income, life insurance premiums, funeral expenses, etc…

Front 21

Under what circumstances would scholarships, not be considered in support?

Back 21

If the dependent is a full-time student and the taxpayer’s son, daughter, stepson or stepdaughter, don’t include scholarships or education expenses paid with scholarship money in the support computation.

Front 22

How are medical and dental expenses paid by insurance policies treated?

Back 22

They are not included in support and insurance proceeds are not included in income

Front 23

How can funds available for support from sources other than the taxpayer be reduced?

Back 23

The dependent may save or otherwise invest all or part of these funds

Front 24

What is the tax purpose of investing these funds by the dependent?

Back 24

It will be easier for the taxpayer to provide over 50% of total support

Front 25

What is the purpose of Form 2120, Multiple Support Declaration?

Back 25

To allow a specified taxpayer to claim an exemption when two or more people together provided over half of a person’s support

Front 26

What requirements must be satisfied to use form 2120?

Back 26

Dependency requirements must be met, each taxpayer must have provided over 10% of the total support

Front 27

What happens if the parties do not agree who will be allowed to claim the exemption?

Back 27

No one will be allowed to claim it

Front 28

How much is the Child Tax Credit worth?

Back 28

Up to $1000 per qualifying child

Front 29

What are the requirements to claim a child for the CTC?

Back 29

The child must be the taxpayer’s dependent who has not reached his 17th birthday by the end of the year and must be a citizen, national or resident of the United States

Front 30

At what income level is the allowable credit phased out for higher income tax payers?

Back 30

The credit will be disallowed in part or in full if the MAGI exceeds:
$75,000 (single, head of household or qualifying widow(er)
$110,000 (MFJ)
$55,000 (MFS)

Front 31

What additional exemption is allowed on Oregon that is not allowed on the federal for a qualified dependent?

Back 31

Severely disabled child

Front 32

What are some of the qualifications to claim the extra OR exemption for a severely disabled child?

Back 32

Must qualify as your dependent and be considered disabled by the State Board of Education or the IDEA (Individuals with Disabilities Education Act)

Front 33

Can a disabled taxpayer who is claimed as a dependent on another taxpayer’s return claim an exemption credit on his OR return?

Back 33

A dependent may never claim his own personal exemption credit but a disabled dependent taxpayer may claim his own severely disabled exemption credit

Front 34

What relationships satisfy the relationship test for a Qualifying Relative?

Back 34

-All relationships included for a qualifying child.
-Father, mother, or ancestor of either
-A brother or sister of your father or
mother
-In-laws, including brother, sister,
son, daughter, father, or mother.
-Any individual who lived with the
taxpayer the entire year.

Front 35

What meets the Gross Income test for qualifying relative?

Back 35

An individual must have a gross income of less than $3650.

Front 36

What meets the Support test for Qualifying Relative?

Back 36

The taxpayer must provide over one-half of the support for an individual.

Front 37

Explain the Not a qualifying child test?

Back 37

The individual must not be the qualifying child of the taxpayer or of any other taxpayer.