Julia provides more than 50 percent of the support for three individuals: Theresa,an unrelated child who lives with Julia all year long;Margaret,Julia's cousin,who lives in another city;and Emma,Julia's daughter who lives in her own home.Each of the potential dependents earned less than $4,050.How many dependency exemptions can Julia claim on her 2016 tax return?
A)0
B)1
C)2
D)3

Question

Quizplus · Accepted Answer

According to IRS rules, in order to claim a dependency exemption, the dependent must have earned less than $4,050 and must have received more than half of their support from the taxpayer. In this case, all three potential dependents meet the first requirement of earning less than $4,050.

Theresa, who lives with Julia all year long, would meet the second requirement of receiving more than half of her support from Julia. Margaret, who lives in another city, does not meet the requirement of receiving more than half of her support from Julia, so she cannot be claimed as a dependent.

Emma, Julia's daughter who lives in her own home, is a bit more complicated. Since she is Julia's daughter, she is considered a "qualifying child" and does not have to meet the support test. However, in order to claim Emma as a dependent, Julia must provide more than half of Emma's support.

Overall, Julia can claim two dependency exemptions: one for Theresa (who meets both requirements) and one for Emma (who meets the qualifying child requirements).

Julia Provides More Than 50 Percent of the Support for Three