13. What is the additional sta
13. What is the additional standard deduction for old age andblindness for a single taxpayer versus a married (filing jointly)taxpayer?
14. When determining a dependent’s standard deduction, whatformula is used?
15. When determining a dependent’s standard deduction, whatincome qualifies as earned income and what income qualifies asunearned income?
16. What are the rules applied when determining which parent (ina divorce) may claim a child as a dependent for purposes ofclaiming the child tax credit in 2018?
Answer:
14.
The standard deduction for an individual for whom an exemptioncan be claimed on another person’s tax return is generally limitedto the greater of:
- $1,050, or
- The individual’s earned income for the year plus $350 (but notmore than the regular standard deduction amount, generally$6,350).
However, if the individual is 65 or older or blind, the standarddeduction may be higher.
Earned income is salaries, wages, tips, professional fees, andother compensation received for personal services you performed.For purposes of the standard deduction, earned income also includesany amounts received as a scholarship that you must include in yourgross income.
In short, Your standard deduction may be reduced if you areclaimed as a dependent on another person’s tax return. If you wereanother person’s dependent during a Tax Year, your standarddeduction will generally be limited to the greater of $1,050 oryour earned income plus $350.
13.
15.
- Earned income: This includes wages, salaries,and other amounts you received as pay for work you actuallyperform. Taxable scholarship income is also generallyincluded.
- Unearned income: Interest, capital gains, andinterest are examples of unearned income. Trust distributions ofdividends, capital gains, interest, and survivor annuities are alsoconsidered unearned income.
16. Only one taxpayer (or married couple filingjointly) may claim any one child for the purposes of the Child TaxCredit and the Additional Child Tax Credit. If a child is claimedas a dependent on more than one tax return, the IRS will determinewho gets the claim according to a set of tiebreaker rules. Thereare situations, such as in the case of divorsed parents, where achild may be claimed as a dependent by more than one person.Generally, only one person (or married couple filing jointly) mayreceive the tax benefits derived from claiming any one dependent.Ifyou file your tax return and someone else has already claimed yourdependent, then the IRS will apply the tiebreaker rules. The IRS tie-breaker rules are applied in the followingorder: 1. Relationship Test: If only one of thetaxpayers claiming the child is the child’s parent, then the childwill be the qualifying child of the parent. 2. ResidenceTest: If both parents claim the child but do not filejointly, then the child will be the qualifying child of the parentwith whom the child lived for a longer time during the year. 3.Income Test: If the child lived with both parentsfor an equal amount of time, then the child will be the qualifyingchild of the parent with the higher adjusted gross income (AGI). 4.No Parent Can Claim: If no parent qualifies toclaim the child, the child will be the qualifying child of theperson claiming the child who has the highest AGI. 5. NoParent Chooses to Claim: If either parent qualifies toclaim the child, but they choose not to, the child will be thequalifying child of the claiming person with the highest AGI,but only if their AGI is higher than that of either parent(if the parents are married and filing jointly, use one half oftheir combined AGI). 6. Special Rule for UnmarriedParents: If the parents are not married but lived togetherwith their child all year and the child meets allqualifying tests for both parents, then the parents may decidewhich parent will claim the child as a dependent.
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