Question

Part 1: Using the following information for tax year 2017, determine if each of the individuals could qualify as: QR = Possible Qualified Relative QC = Possible Qualified Child B = Both N = Neither Here are the individuals that you are to test Taxpayer’s son has gross income of $7,000. Taxpayer’s niece has gross income of $3,000. Taxpayer’s uncle lives with him. Taxpayer’s daughter is age 25 and disabled. Taxpayer’s daughter is age 18 but does not live with him. Her gross income is $8,000. Taxpayer’s cousin does not live with her. Taxpayer’s brother does not live with her. Taxpayer’s sister lives with him. She is age 20 and has dropped out of school. Taxpayer’s older nephew is age 23 and a full-time student. Taxpayer’s grandson lives with her. His gross income is $7,000. Part 2: Determine the amount of standard deduction for tax year 2017. Curtis, age 18, has income as follows: $700 interest from a certificate of deposit and $6,000 from repairing cars. Mattie, age 18, has income as follows: $600 cash dividends from a stock investment and $4,700 from handling a paper route. Mel, age 16, has income as follows: $800 interest on a bank savings account and $700 for painting a neighbor’s fence. Lucy, age 15, has income as follows: $400 cash dividends from a stock investment and $500 from grooming pets. Sarah, age 67 and a widow, has income as follows: $500 from a bank savings account and $3,200 from babysitting.

Part 1
	Answer	Explanation	Calculations
a
b
c
d
e
f
g
h
i
j
Part 2
	Answer	Explanation	Calculations
a
b
c
d
e

Answer 1

a.Taxpayer’s son has gross income of $7,000. QC

1.Relationship test-The son passes the relationship test for both Qualifying Child and Qualifying Relative because he is the taxpayer's son. QC and QR

2. Gross Income, Abode and Support Tests- In order to still qualify as a qualifying relative, the son must have a gross income for the year of $3,900 for 2017. His income exceeds this at $7,000 so he cannot be claimed as Qualifying Relative. Judging on the fact his gross income is still only $7,000, we can assume he lives at home for more than half the year and cannot provide more than half his own support therefore passing the abode and support tests. QC

3. The scenario does not disclose his age. If he is not under the age of 19 or 24 and a full-time student five or more months a year he cannot be claimed as a dependant. Assuming he is under the age of 19 because the scenario does not mention if he is a student, the son will then pass the age test and having past all four, will qualify as a QC. We can also assume that he will not file his own return. At an gross income of $7,000, assuming no deductions, the total of his exemptions ( 1) and a standard deduction (1) of $3,900 each his taxable income would be 0 ($7,000- ($3,900 + $3,900) = -$800).

b. Taxpayer’s niece has gross income of $3,000. B

1. Relationship- The niece passes the relationship test for both Qualifying Child and Qualifying Relative because she is the taxpayer's niece. QC and QR
2. Gross Income Test- The niece could still qualify as a Qualifying Relative because she has a gross income of $3,000 which is under the required $3,900 for 2017. QR
3. Abode- The scenario does not state whether the taxpayer's niece lives with the taxpayer for more than half the year but assuming she does because she only makes a gross salary of $3,000 a year, she would also pass the abode test. QC
4. Age test- The scenario doesn’t explain her age or if she is a student. If she is under 19 or under 24 and attending school full-time atleast 5 months of the year she would pass the age test. QC.

1. Support test- Because she has a gross income of $3,000, we can assume she cannot provide at-least half of her own support and therefore passes the support test for both Qualifying Child and Qualifying Relative. We can assume she would not file her own return because her gross income is less than her exemptions and deductions, leaving her with no taxable income. Having passed all tests for both, based on some assumptions, she could then qualify as both Qualifying Child and Qualifying Relative

c.Taxpayer’s uncle lives with him.QR

1. Relationship test- The taxpayer's uncle cannot be considered a qualifying child because he does not pass the relationship test for it. He does pass the relationship test under qualifying relative however.
2. Gross Income Test-The scenario does not state the uncle's gross income. If his gross income is under $3,900 for 2017 he would pass the Gross Income Test. Also assuming he makes a gross income of under $3,900, we can assume he will not file because his exemptions and deductions would be greater than his gross income.
3. Support test- Assuming because the uncle lives with the taxpayer we can assume the taxpayer contributes to more than 50 percent of the uncle‘s needs(i.e. food, clothing etc.). The uncle would have then passed all three and would be a Qualifying Relative or QR.

d.Taxpayer’s daughter is age 25 and disabled.- B

1. Relationship Test- The daughter passes the relationship test for both Qualifying Child and Qualifying Relative.
2. Abode test- Assuming the daughter lives with the taxpayer for more than half the because she is disabled would allow her to pass the abode test for Qualifying Child
3. Age test- She passes the age test because even though she is over 19 or over 24 and not in school full-time, because she is disabled the age test does not apply.
4. Gross Income Test- The daughter is disabled so she probably cannot work and therefore has a gross income of under $3,900 for 2017 and passes the Gross Income Test. She mostly like then would not have filed for 2017.
5. Support Test- Assuming because she is disabled, she cannot provide half or more of her own support so she would pass the support test for both Qualifying Child and Qualifying Relative. Passing all tests for both would qualify her as both Qualified Child and Qualifying Relative.

e. Taxpayer’s daughter is age 18 but does not live with him. Her gross income is $8,000.- N

1. A. Relationship Test- The taxpayer's daughter would pass the relationship test for for both Qualifying Child and Qualifying Relative. QC and QR

b. Age test- She passes the age test because she is under the age of 19 QC

C. Abode test- she does not live at home, therefore failing the abode test. NOT QC

d. Gross Income Test- She fails the gross income test for Qualifying Relative because it is over $3,900 for 2017. NOT QR

d. Support test- If she is not living at home, we can probably assume she is supporting herself by paying at least half her bills and therefore failing the support test as well. NEITHER QC or QR

       Having failed one or more tests for either exemption she cannot be considered a Qualifying Child nor Qualifying Relative.

F Taxpayer’s cousin does not live with her. -N

1. Relationship test- The taxpayer's cousin automatically does not pass either relationship tests for for both Qualifying Child and Qualifying Relative. N
2. Abode test- The cousin does not live with her so the cousin doesn’t pass the support test assuming N
3. Age test- We can assume the age of the cousin is under 19 or 24 if the cousin is a full-time student more than five months of the year and then the cousin would pass the age test. QC
4. Gross Income Test- Assuming the cousin has a gross income of more than $3,900, the cousin would not pass the gross income test.   Having failed more than test in both categories, the cousin cannot be claimed as a qualifying child or qualifying relative.

g. Taxpayer’s brother does not live with her. N

a. Relationship test- The brother would pass the relationship test for for both Qualifying Child and Qualifying Relative. QC and QR

b. Abode test- He does not live with the taxpayer therefore failing the abode test. NOT QC.

c. Age test- The scenario does not disclose age or if the brother is a student. . If he is under 19 or under 24 and attending school full-time at least 5 months of the year he would pass the age test. POSSIBLY QC.

d. Gross Income Test- His gross income is not listed. He could pass the gross income test if his gross income is under $3,900 for 2017. QR

e. Support Test- If he is not living with the taxpayer, we can probably assume he is supporting himself by paying at least half his own bills and therefore failing the support test for both Qualifying Child and Qualifying Relative. NEITHER QC or QR

Having failed one or more tests in either category, he could not be claimed either Qualifying Child and Qualifying Relative

h. Taxpayer’s sister lives with him. She is age 20 and has dropped out of school. QR

a. Relationship test- The taxpayer's sister passes the relationship test for QC and QR because he is the taxpayer's sister. QC and QR

b. Abode test- She lives with him passing the abode test QC

c. Age test- She fails the age test because she is 20 and not a student, therefore not qualifying as a Qualifying Childe. In order to pass the age test, at age 20 she must be a full-time student more than five months of that year. NOT QC

d.. Support Test- Assuming she doesn't pay half her own bills because she lives with her brother, she also passes the support test for both Qualifying Child and Qualifying Relative. QC and QR.

e. Gross Income Test- Assuming she is not grossing more than $3,900 because she dropped out of school and probably does not have a job, she would pass the gross income test QR.

Having passed all three tests for Qualifying Relative, based on some assumptions, the brother could claim his sister as a Qualifying Relative.

i. Taxpayer’s older nephew is age 23 and a full-time student. N

a. Relationship test- He passes the relationship test for both Qualifying Child and Qualifying Relative because he is the newphew of the taxpayer. QC and QR

b. Abode- The scenario doesn’t say if the nephew lived with the taxpayer for more than half of 2017. If he did he would pass the abode test. POSSIBLE QC

c. Age test- Even though the nephew is a full-time student and is 23 he dosnt pass the age test because he older than the taxpayer. NOT QC

d. Support test- The scenario doesn’t state if the taxpayer is supporting the nephew. If assumed taxpayer does not support the nephew by paying more than half of the nephews expenses like food or clothing because the nephew is younger than 23 then the nephew fails the support test for Qualifying Child and Qualifying Relative. NO QC and QR

e. Gross Income Test- If it is assumed the nephew grosses under $3,900 for 2017 because he is a full-time student and therefore probably doesn’t work very much, he would pass the Gross Income Test. POSSIBLE QR

Because the nephew failed atleast the test for each category he can be claimed as neither Qualifying Child or Qualifying Relative.

j. Taxpayer’s grandson lives with her. His gross income is $7,000. QC

a. Relationship test- The taxpayer's grandson passes the relationship test for both Qualifying Child and Qualifying Relative because he is her grandson. QC and QR

b. Abode test- He passes the abode test because he lives with the taxpayer, assuming its for at least half the year. QC

c. Age test- The scenario doesn’t state the grandson’s age. In order to pass the age test he must be under 19 or under 24 and a full-time student any part of five months of the year to qualify. Assuming he is either, he passes the age test. POSSIBLE QC

d. Support test- Assuming because the grandson lives with her and only makes gross income of $7,000, he cannot pay more than half of his bills and is supported by his grandma, passing the support for both Qualifying Child and Qualifying Relative.

e. Gross Income Test- He fails the gross income test because his gross income is $7,000 which is more than the $3,900 cap. NOT QR

Assuming he passes the age test, he would then pass all four and qualify as a QC for his Grandma.