Question

During 2010, Al, his daughter and son (both adults), and his grandchild Candy, the minor child of his daughter, all resided in Al’s home.

Al’s son filed his 2010 Federal income tax return on February 28, 2011. On that return, the son claimed a personal exemption deduction for himself. He also claimed $1,129 in refundable tax credits and $75 withheld tax, resulting in a refund of $1,204.

Al’s daughter also filed her 2010 Federal income tax return on February 28, 2011. She reported gross income of $11,892 and claimed a personal exemption deduction for herself and a dependent exemption deduction for Candy(her daughter and Al’s granddaughter). The daughter also claimed $4,450 in refundable credits and $840 withheld tax, resulting in a refund of $5,290.

Al applied for and was granted an extension of time to file his 2010 return (due April 15, 2011) which he timely filed on May 23, 2011. On his tax return, Al:

claimed head of household filing statusclaimed dependency exemption deductions for his son, his daughter, and his granddaughter (Candy).

Al approached you for advice. He knows that you are currently taking an income tax course and is seeking your guidance. He informs you that his intention is to have his daughter amend her return to remove Candy as her dependent. Al also informed you that his daughter will provide a notarized statement to indicate her approval of Al claiming Candy.

Answer 1