Exemptions

Question 1

Describe the residency test.

Answer 1

A dependent must be a citizen, resident of U.S., or resident of Canada or Mexico.

Question 2

When does a taxpayer qualify for the head of household filing status?

Answer 2

The taxpayer must provide more than one-half of the cost of maintaining the home in which a qualifying child or other dependent relative lives for more than half the tax year.

Question 3

Describe the exemption phase-out.

Answer 3

Two percent of total exemptions are lost for each $2,500 increment (or portion) above the trigger AGI.

Question 4

List the six tests for a child to qualify for the dependency exemption.

Answer 4

1. Residence Test;
2. Age Requirement;
3. Relationship Test;
4. Marital Test;
5. Residency Test;
6. Not self-supporting test.

Question 5

True or false: Phase-out of exemption applies to only personal exemptions.

Answer 5

False. It applies to both personal and dependency exemptions.

Question 6

Describe the qualifying relative gross income test.

Answer 6

The gross income of the dependent cannot exceed the exemption amount for the year, unless one of the following exceptions is met: 1.child of the taxpayer less than 19;
2.full-time student and less than 24.

Question 7

When do multiple support agreements apply?

Answer 7

individual would otherwise be eligible to claim dependent;

2. Each individual provides over 10% but less than half of support;
3. A written agreement allocates the dependency exemption to an individual providing more than 10% of support.

Question 8

List the five tests for “qualifying relative.”

Answer 8

1. Support test;
2. Gross income test;
3. Relationship test;
4. Marital test;
5. Residency test.

Question 9

Describe the qualifying child residence test.

Answer 9

The child must have the same residence as the taxpayer for more than one half of the taxable year.

Question 10

When parents are divorced, which parent is able to claim the dependency exemption for the child?

Answer 10

1. Parent with custody (over half the year) gets the exemption in the absence of any written agreement;
2. The custodial parent can waive the exemption to the other party (in writing by filing Form 8332).

Question 11

Describe the qualifying child relationship test.

Answer 11

The child must be a natural, step, adopted, or foster child; a sibling or step-sibling; or a descendent of one of the above.

Question 12

Describe the qualifying child non self-supporting test.

Answer 12

The child must not have provided more than one-half of his or her own support.

Question 13

Describe the qualifying relative support test.

Answer 13

The taxpayer must provide more than 50% of the dependent’s total support.

Question 14

Describe the marital test for a dependent.

Answer 14

A dependent cannot file married joint, unless only to obtain a refund and there was no tax liability for the year.