ExpertHard1 markMultiple Choice
CPA · Question 29 · Area IV: Individual Taxation
A single taxpayer provides more than half the support for a parent who lives in a nursing home. The parent received $3,000 in taxable interest income and $8,000 in non-taxable Social Security benefits. The parent has no other income. Can the taxpayer claim the parent as a dependent?
A single taxpayer provides more than half the support for a parent who lives in a nursing home. The parent received $3,000 in taxable interest income and $8,000 in non-taxable Social Security benefits. The parent has no other income. Can the taxpayer claim the parent as a dependent?
Answer options:
A.
Yes, because the parent is a qualifying relative.
B.
No, because the parent does not live with the taxpayer.
C.
No, because the parent's income exceeds the gross income limitation.
D.
No, because the parent is in a nursing home.
How to approach this question
Qualifying Relative Parent: 1. Support > 50%. 2. Gross Income < Exemption Amount (approx $5,050 in 2024/25). 3. Relationship (Parent doesn't need to live with you).
Full Answer
A.Yes, because the parent is a qualifying relative.✓ Correct
A parent can be a qualifying relative even if they don't live with the taxpayer. The gross income test considers only taxable income. Since $3,000 is less than the exemption amount (indexed, but generally ~$5,000+), and the taxpayer provides >50% support, the parent qualifies.
Common mistakes
Including non-taxable Social Security in the gross income test; thinking parents must live with the child.
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