Question

1:2-39 tax payments. Dependency Requirements, Child Tax Credit, and Credit for Other Dependents. How many dependents does the taxpayer have, assuming the people involved are U.S. citizens? What amount of credit may be claimed for the taxpayer's dependents? a. Andrew supports his cousin Mary, who does not live with him. Mary has no income and is single. b. Bob and Ann are filing a joint return, Bob provided over one-half of his father's support. The father received Social Security benefits of $6,000 and taxable interest income of $800 (the Social Security benefits are wholly tax-exempt in this situation). The father is single and does not live with them. c. Clay provides 60% of his single daughter's support. She earned $3,000 while attending school during the year as a full-time student. She is 22 years old.

Answer 1

a) Mary qualifies as a dependent as she satisfies the condition of being Andrew's cousin and being completely dependent on Andrew for life support. Hence credit of $500 will be provided to Andrew under Credit for Other Dependents.

b) Bob's father qualifies as a dependent as he satisfies the condition of being related to bob and being dependent on bob for more than half of life support needs. Hence credit of $500 will be provided to Bob under Credit for Other Dependents.

c) Clay's daughter counts as a qualifying child as the conditions of being under the age of 24 and a full time student provided that we assume she has been residing with clay in the same house, which will entitle clay for a Child Tax Credit of $2000. In case she isn't residing with clay in the same house, no Child Tax Credit will be given.