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Dependency Requirements. Juan helps support his mother
Maria, his son Jose, and a niece Norma. How man y dependents can Juan claim
given these additional faces?
Maria lives with Juan. She receives $12,000 of Social
Security benefits, which she uses to pay for food, clothing, medical expenses,
and other living expenses (the Social Security is wholly tax-exempt in this
situation). Juan provides Maria ‘s room which has a rental value of $5,000 and
pays an additional $4,000 toward her support. Jose, age 12, lives with his
mother, Linda. Juan pays $12,000 per year child support, and Linda provides an
additional $4,000 of support. Norma, age 20, is a part-time college student who
lives in an apartment. She earned $6,000 working part -time and received a
scholarship of $2,000. Norma’s father provided $4,000 toward her support, and
Juan provided $7,000.

Multiple Support Agreements. Anna, age 65, who lives with her unmarried son, Mario, received $7,000, which was used for her support during the year. The sources of support were as follows:
The Social Security benefits are wholly tax-exempt in this situation. Assume a multiple support agreement (Form 2120) is properly filed.
a. Who is eligible to claim Anna as a qualifying relative?
b. If Mario wants to claim Anna as a qualifying relative, who must agree to it?
c. If Mario claims Anna as a qualifying relative, what is his standard deduction?

Dependency Requirements and Child Credit: Divorced Parents.
Joe and Joan divorce during the current year. Joan receives custody of their three
children. Joe agrees to pay $5,000 of child support for each child.
a. Assuming no written agreement, who claims their children
as dependents, and who claims the child credit for them Explain.
b. Would it make any difference if Joe could prove that he
provided over one-half of the support for each child?

Fom1 1040 Schedules. Determine which of Schedules 1 through
5 the taxpa yer(s) will file with Form 1040 for each case:
a. Abby and Bert are married, file a joint tax return, and
have two qualifying children (ages 4 and 8). Their only income is $70,000 of
salaries and wages, from which $4,500 of federal income taxes are withheld.
They claim the standard deduction and child care credit.
b. Celeste is a full-time college student and a qualifying
child of her parents. Her only income is $7,500 of wages from a part -time job.
She claims the standard deduction.
c. Donna and Ernie (ages 64 and 67) are married, file a
joint tax return, and have no dependents. Donna receives a $125,000 salary for
the year, and Ernie receives $45,000 of taxable pension benefits. Federal
income taxes of $30,000 are withheld. Donna and Ernie have $10,000 of qualified
dividends and a $4,000 long-term capital gain from their investments. They
claim itemized deductions rather than the standard deduction.
d. Fiona is age 12 and a dependent of her parents. Her only
income is $25,000 of taxable interest from bonds she inherited from a
grandparent. She made $3,100 of estimated tax payments.

Head of Household. ln the following situations, indicate
whether the taxpayer qualifies as a head of household.
a. Allen is divorced from his wife. He maintains a household
for himself and his dependent mother.
b. Beth is divorced from her husband. She maintains a home
for herself and supports an elderly aunt who lives in a retirement home.
c. Cindy was widowed last year. She maintains a household
for herself and her dependent daughter, who lived with her during the year.
d. Dick is not divorced, bur lived apart from his wife for
the entire year. He maintains a household for himself and his dependent
daughter. He does not receive any financial support from his wife.