35 LO3 4 Determine how many personal and dependency exemptio

35. LO.3, 4 Determine how many personal and dependency exemptions are available in each of the following independent situations. Specify whether any such exemptions would come under the qualifying child or the qualifying relative category. a. Andy maintains a household that includes a cousin (age 12), a niece (age 18), and a son (age 26). All are full-time students. Andy furnishes all of their support b. Jackie provides all of the support of a family friend\'s son (age 20) who lives with her. She also furnishes most of the support of her stepmother, who does not live with her c. Raul, a U.S. citizen, lives in Costa Rica. Raul\'s household includes his friend Helena, who is age 19 and a citizen of Costa Rica. Raul provides all of Helena\'s support. d. Karen maintains a household that includes her ex-husband, her mother-in- law, and her brother-in-law (age 23 and not a full-time student). Karen po vides more than half of all of their support. Karen is single and was divoro last year.

Solution

An individual can take exemptions for himself unless he is claimed as dependent by another tax payer. These exemptions are called Personal exemptions.

Whereas, Dependency exemptions can be applied in the case where the child below 20 years or a relative child is dependent on the tax payer and staying with the taxpayer under the same roof.

Case 1: Jackie provides all of the support of a family friend\'s son (age 20) who lives with her.

In the above case, Jackie cannot avail dependency exemption due to following three reasons:

But the dependent can avail Personal exemption in this case as Jackie cannot avail Dependency exemption for the concerned dependent.

In short, Dependency exemption is not available in the above mentioned case but Personal exemption is available.

Case 2: Jackie furnishes most of the support of her stepmother, who does not live with her.

In this case, since the dependent is a relative who qualify under Dependency exemptions, Jackie can avail Dependency exemption. Here, Personal exemption cannot be applied since Dependency exemption is already applicable.

In short, Dependency exemption is available in the above mentioned case but Personal exemption is not available.