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Using 2018 tax law, answer these questions about the following scenario. Numbers in parentheses indicate age....

Using 2018 tax law, answer these questions about the following scenario. Numbers in parentheses indicate age. Each taxpayer has only the income stated. Unless otherwise stated, each prospective dependent is an unmarried U.S. citizen who does not provide more than half of their own support. In no case will more than one taxpayer attempt to claim the same qualifying child as a dependent. No one other than the persons listed live in the home.

Karla (25) is unmarried and was a full-time student from January through June. Karla worked part-time but did not provide more than 50% support for herself or her son, Sam (1). Karla and Sam lived with Karla's parents, Ron (48) and Sue (47), the entire year. Karla's wages were $7,204. Ron's wages were $52,013; Sue's wages were $38,750; Sam's income was $350. Karla will allow her parents to claim Sam this year. Karla, Sam, Ron, and Sue had health care coverage all year through Ron's employer. Ron and Sue are not claiming any education or retirement savings contribution credits on their married filing jointly return.

What is Karla's standard deduction?

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Homework Answers

Answer #1
  • Karla (25 year old mother) have to file her own return.
  • Ron and Sue can claim Sam as qualifying child in their tax return.
  • They will be eligible to claim EITC with one qualifying child.

Karla made more than 2018 threshold earnings of $4,150. Even if Karla was two year younger(23), her student's status would not qualify her as qualifying child for her parents as she has crossed the threshold earnings. Karla was unable to meet more than half of her own support. Thus, she was unable to meet more than half of her child's support and was not allowed to claim her child as qualified. Sam was related to Ron and Sue, so he was a qualifying child for them and they were eligible to claim EITC. Had, Sam been a qualifying relative, they would not have been eligible for EITC with one qualifying child.

Karla is not a dependant child and a single filer. So, her standard deduction for 2018 is $12,000.

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