REG 1 - Filing Requirements, Filing Status, and Exemptions

Question 1

Can individuals eligible to be claimed as dependents on another’s tax return, claim themselves as a personal exemption?

Answer 1

Persons eligible to be claimed as dependents on another’s tax return will not be allowed a personal exemption on their own returns.

Question 2

How many personal exemptions do married filing joint taxpayers receive?

Answer 2

Each spouse receives a personal exemption.

Question 3

How can a spouse claim husband/wife as a personal exemption if married filing separate?

Answer 3

1) The taxpayer’s spouse has no gross income

2) The taxpayer’s spouse wasn’t claimed as a dependent of another taxpayer

Question 4

Can a taxpayer claim personal or dependencey exemption if a person is born or dies during the year?

Answer 4

If a person is born or dies during the year, taxpayer gets full exemption.

• Exemptions are not prorated

Question 5

How are personal exemptions treated when a taxpayer’s income increases?

Answer 5

Personal exemptions are phased out when income increases

Question 6

What are the two categories for dependency exexmptions?

Answer 6

Option 1 - Qualifying Child (CARES)

Option 2 - Qualifying Relative (SUPORT)

Question 7

What are the requirements of the qualifying child dependency exemption? Option 1

CARES

C - Close relative
A - Age limit
R - Residency and filing requirements
E - Eliminate gross income
S - Support test changes

Answer 7

C - Close relative
A - Age Limit
- Up to 19 years old or
- Up to 24 years old and in college
R - Residency and filing requirements
- A child of the taxpayer must have the same principal place of abode as the taxpayer for more than one half of tax year
- Child cannot file joint tax return
E - Eliminate gross income
- Gross income of child does not matter to qualify child as dependent (e.g. rock star child)
S - Support Test Changes
- Child did NOT contribute more than one half of his or her own support

Question 8

What are the requirements of the qualifying relative dependency exemption? Option 2

SUPORT

S - Support test
U - Under exemption amount of taxable income
P - Precludes dependent filing joint return
O - Only citizens of the U.S. or residents of U.S., Mexico and Canada
R - Relatives
T - Taxpayer

Answer 8

S - Support test
- Taxpayer provided more than one half of support to dependent (or multiple support, discussed later)
U - Under exemption amount of taxable income
- Dependent’s TAXABLE income cannot be greater than personal exemption amount ($4,050).
- Dependent’s nontaxable income can be greater than personal exemption amount ($4,050). (E.g. social security income (at low levels), tax-exempt interest on government bonds, and tax-exempt scholarships)
P - Precludes dependent filing joint return
- A taxpayer will lose the exemption for a married dependent who files a joint return
O - Only citizens of the U.S. or residents of U.S., Mexico, and Canada
R - Relatives
- All relatives can be claimed as dependents, except:
Cousins and foster parents must live with taxpayer for the ENTIRE year
T - Taxpayer
- Individual can be claimed as a dependent if they live with taxpayer for ENTIRE year

Question 9

Define multiple support agreeement?

Answer 9

• Only one supporter gets full exemption
• When two or more supporters contribute more than 50% of the support of a person together, but no one single person contributes more than 50%.
• Contribution of supporter claiming exemption must be more than 10%.