In year 1, the bennetts' 25-year-old daughter, jane, is a full-time student at an out-of-state university but she plans to return home after the school year ends. in previous years, jane has never worked and her parents have always been able to claim her as a dependent. in year 1, a kind neighbor offers to pay for all of jane's educational and living expenses. which of the following statements is most accurate regarding whether jane's parents would be allowed to claim an exemption for jane in year 1 assuming the neighbor pays for all of jane's support? a. no, jane must include her neighbor's gift as income and thus fails the gross income test for a qualifying relative. b.yes, because she is a full-time student and does not provide more than half of her own support, jane is considered her parent's qualifying child. c.no, jane is too old to be considered a qualifying child and fails the support test of a qualifying relative. d.yes, because she is a student, her absence is considered as "temporary." consequently she meets the residence test and is a considered a qualifying child of the bennetts.
1) D. None of these.
3) C. No, Jane is too old to be considered a qualifying child and fails the support test of a qualifying relative.
1) AGI deductions are subtracted from the gross income to calculate the taxable income. Not all the individual's earnings are subject to taxation, therefore some expenses are deducted to calculate the Adjusted Gross Income, the one that will be taxed.
All of the three options listed ( Standard deduction, Itemized deduction, and personal exemption) are AGI deductions.
The potential qualifying relative does not have to be family/biologically related with the taxpayer. The IRS condition states that he/she is either family related or have lived in the taxpayer's abode for a whole year to be a qualified relative of the taxpayer. So far any of the two conditions are met, it is fine.
C. For a student to be regarded as a qualifying relative of her parents, she must not be up to 24 years at the end of the year according to IRS. Jane is already 25, she is too old and fails the test as a qualifying relative.
The biological parents
The neighbour is just showing kindness