John and Tara Smith are married and have lived in the same home for over 20...

John and Tara Smith are married and have lived in the same home for over 20 years. John's uncle Tim, who is 64 years old, has lived with the Smiths since March of this year. Tim is searching for employment but has been unable to find any—his gross income for the year is $2,000. Tim used all $2,000 toward his own support. The Smiths provided the rest of Tim's support by providing him with lodging valued at $5,000 and food valued at $2,200. Assume the original facts except that Tim earned $10,000 and used all the funds for his own support. Assume the original facts except that Tim is a friend of the family and not John's uncle

Solutions

Expert Solution

a.In the Original situation - Yes. The Smiths may claim Tim as a dependent as a qualifying relative as analyzed below

Test	Tim
Relationship	Yes, Tim meets qualifying relative test
Age	Not applicable to qualifying relative
Residence	Not applicable to qualifying relative
Support	Yes. The Smiths provided more than half of Tim’s support ($7,200/$9,200)
Gross Income	Yes, Tim’s gross income is less than the exemption amount.

b. Assume the original facts except that Tim earned $10,000 and used all the funds for his own support

No. The Smiths may not claim Tim as a dependent because he is not a qualifying relative as analyzed below

Test	Tim
Relationship	Yes, Tim meets qualifying relative test
Age	Not applicable to qualifying relative
Residence	Not applicable to qualifying relative
Support	No, the Smiths did not provide more than half of Tim’s support ($7,200/$17,200)
Gross Income	No, Tim’s gross income ($10,000) is more than the exemption amount.

c. Assume the original facts except that Tim is a friend of the family and not John's uncle

No. The Smiths may not claim Tim as a dependent because he is not a qualifying relative as analyzed below

Test	Tim
Relationship	No. No family qualifying relationship, and Tim did not live with the Smiths for the entire year.
Age	Not applicable to qualifying relative
Residence	Not applicable to qualifying relative
Support	Yes, the Smiths provided more than half of Tim’s support ($7,200/$9,200)
Gross Income	Yes, Tim’s gross income is less than the exemption amount.

ekkarill92 answered 5 months ago

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