Income Tax Dependency Exemptions

a. How many dependency exemptions are the Bakers entitled to claim for the year? Explain your answer.

The Bakers are entitled to claim 2 exemptions.

Calvin Carter – not a dependent: The total amount of support for each person would be $3,500 based on a total fair rental value and food of $24,500/7 people in household. Galvin provided his own clothing, transportation and recreation in the amount of $4,000. In addition he paid for his own medical expenses. The $1,200 paid for life insurance by the Bakers does not count toward the total amount of support. This combined amount is more than half of his own support and he therefore does not qualify to be claimed as a dependent.

Florence Carter – dependent: Again, the total amount of support provided by the Bakers is $3,500 plus the $1,000 for dental work making the total provided $4,500. Florence only provided $4,000 of her own expenses. Since the Bakers provided more than half of her expenses and she meets all other tests for dependency, she qualifies as a dependent.

Darin Baker – dependent: Darin meets the relationship test, the age test because he is younger than 19, the residency test and he does not file a joint return. The only test in question would be the support test. Darin earned $14,000, but he did not use any of that money toward his own support. He is saving it for college. The Bakers provided all of his support. Since Darin passes all the exemption tests for a qualifying child, his is considered a dependent.

Andrea Baker – not a dependent: Andrea does not meet the age test for dependency. She is 19 and is not a full-time student. Additionally, she probably does not pass the support test as she paid $21,000 for a car, which is transportation. This is considerable more than half of her support. Since Andrea did not meet all the tests, she is not considered a dependent.

Morgan Baker – not a dependent: Morgan passes the age test because she is under 24 and a full-time...