Question

5) What are the three additional tests that must be met to be a qualifying relative? Briefly explain each test.

6) Points paid at settlement on the initial financing of one's principal residence must be capitalized and amortized over the period of time to which they relate.

True or False

7) Interest credited to a taxpayer's savings account is not included in their income until it is withdrawn. True or False

8) A taxpayer receives rental income in 2019, with the understanding that he will rebate whatever is deemed excessive by rent-control authorities. He is compelled to make such a rebate in 2020. He should include the full amount of the rent received in 2019, in his income for that year. True or False

Answer 1

Answer:

5. A Qualifying relative is a person with regardless of age who meets certain requirement/test to be claimed as a dependent for tax purpose.Requirements are like :

he must not be a qualifying child,

he must have lived for the entire year with the relation by blood or adoption,

he must have a gross income not less than $4200 in 2019. and

must have received more than half of the person's financial support during year

Additional test/ special conditions

1. Temporary absence: If a person has gone away from home for schooling or medical care, vacation etc they are treated as staying with tax payer.

2. If a qualifying relative is born or dies, they also are considered to have lived with tax payer.

3.If the amount received but the amount had not spend also can be treated as support from the person.

7.

False. Interest from savings bank ac/ should be shown under the head income from other sources. However, A deduction under section 80TTA may be availed upto an amount of Rs.10000/ and Rs.50000/- for senior citizens under section 80TTB