H&R Block 2018 Scenarios
Madeline homeschools her daughter, Pamela. Madeline spent $380 on homeschool supplies and books for Pamela. Pamela is in the second grade, and Madeline spent 1,200 hours teaching Pamela in 2018. How much, if any, educator expense can she deduct?
$0. Expenses for homeschooling are not included in the qualified expenses for the educator expense deduction.
Lenard works as an administrator at Your City Middle School. In 2018, he spent $80 on supplies for his office. He was not reimbursed for the office supplies. He worked 1,000 hours for the year. How much, if any, educator expense can he deduct as an adjustment?
$0. Qualified expenses for the educator expense deduction do not include expenses for supplies not used in the classroom.
Antoine Rimbald is a degree candidate. For 2018, his tuition was $8,300, his required equipment fees and books cost $1,850, and his room and board were $4,200. Antoine received a $15,000 scholarship that does not specify the expenses to which it must be applied. How much, if any, of his scholarship income is taxable?
$4,850 of Antoine's scholarship is taxable. Antoine's tuition, fees, and book costs total $10,150. The portion of his scholarship money in excess of this is taxable [$15,000 - $10,150 = $4,850 taxable scholarship]. The cost of his room and board is not a qualified educational expense, and the portion of scholarship funds used to pay these expenses is generally taxable.
Sheila donated a refrigerator that she purchased for $2,600. FMV at time of donation was $450. What is her deduction?
$450. The fair market value of the refrigerator is the allowable deduction.
Barbara is a law clerk for Your County. Which type of retirement plans would she contribute to through her employer?
457 retirement plans are mainly available to government employees.
Crystal's husband, Charlie (31), was deployed in May of 2018. Crystal (30) paid 70% of the cost of maintaining a home for their daughter, Amethyst (9). Can Crystal file as head of household?
Charlie's deployment is considered a "temporary absence," and therefore they are not considered to have lived apart for the last six months of the year. Thus, Crystal does not meet the "considered unmarried" requirements.
In 2018, DuJuan received $14,000 in cash from his uncle. His uncle gave him the money as a gift to help him buy a new car. Is the income taxable or nontaxable?
DuJuan's gift from his uncle is nontaxable to DuJuan and is not reported on his income tax return. Generally, property (including cash) an individual receives as a gift, bequest, or inheritance is not included in income.
Kenneth Griffin paid qualified expenses for his son, John, who he claims as a dependent. John is a freshman at State University. Is Kenneth eligible to claim the AOTC?
Eligible. Kenneth may claim an education credit for John's qualified expenses.
Sharon Liston supports her son, Robert (20), an unmarried college student. He earned $6,700 in wages from a part-time job and paid qualified expenses in 2018. Sharon plans to claim Robert as a dependent. Her taxable income is $30,000. Is Sharon eligible to claim the AOTC?
Eligible. Sharon may claim an education credit for Robert's qualified expenses.
Sharon Liston supports her son, Robert (20), an unmarried college student. He earned $6,700 in wages from a part-time job and paid qualified expenses in 2018. Sharon plans to claim Robert as a dependent. Her taxable income is $0. Is Sharon eligible to claim the AOTC?
Eligible. Sharon will not benefit from claiming Robert as a dependent. If she chooses not to claim Robert as a dependent, Robert may claim an education credit for his qualified expenses on a dependent tax return. In no case may Robert file as a non-dependent. If Sharon did claim Robert's dependency, she would benefit from the refundable portion of the AOTC.
Emma Jessup (70), a single taxpayer, was born on May 26, 1948. Her net self-employment income for the year is $15,000. What is her maximum allowable traditional IRA contribution?
Emma's maximum allowable traditional IRA contribution is $0. Although she has sufficient compensation, she will have reached age 70½ before the end of the tax year.
Deanna Shoenburger was born on January 1, 1978. For tax purposes, how old is Deanna for the 2018 tax year?
For general tax purposes, she is considered to be age 41 for the 2018 tax year, even though her 41st birthday does not occur until January 1, 2019.
Jane McGuire's 65th birthday is January 1, 2019. For tax purposes, how old is Jane for the 2018 tax year?
For tax purposes, she is considered age 65 for the 2018 tax year (a taxpayer has attained any given age the day before their birthday).
In 2018, Fran earned $23,874 in wages from working at her local grocery store. She received a Form W-2 from her employer, reporting $23,874 of wages in boxes 1, 3, 5, and 16. Is this amount taxable or nontaxable?
Fran's wages from her job at the local grocery store are taxable and reported on Form 1040, line 1.
Emanuella's daughter, Gabriela, was 8 years old at the end of 2018. Gabriela is not a citizen of the United States, has an Individual Taxpayer Identification Number (ITIN), and lived in Mexico for all of 2018. Is Gabriela a qualifying child for CTC?
Gabriela is not a qualifying child for the Child Tax Credit because she was not a U.S. citizen, national, or resident of the United States for 2018.
Darrell (12) was claimed by his aunt, Felicia, and his older brother, Gerald. Darrell lived with both Felicia and Gerald for four months. He lived with Felicia for five months separately. He lived with Gerald for three months separately. Felicia's AGI was $29,290. Gerald's AGI was $31,205. Who can claim Darrell?
Gerald. If no parent claims the child, then the person with the highest AGI will claim Darrell.
In 2018, Gwyn lost her job and received $8,239 in unemployment compensation from her state division of unemployment. She received a Form 1099-G from the state showing $8,239 in box 1. Is this amount taxable or nontaxable?
Gwyn's unemployment compensation is taxable and reported on Schedule 1 (Form 1040), line 19.
Juanita (42) is unmarried and pays 65% of the cost of maintaining a home for her father, Barnaby (77), who had no taxable income. Juanita will claim Barnaby on her tax return in 2018. What filing status should Juanita use?
Head of Household
Julie filed her 2018 income tax return on April 15, 2019, with a balance due of $400. Due to some unforeseen car expenses, she did not have the funds available to pay the tax due at the time she filed. She paid $200 of the tax liability on July 15, 2019, and the balance on October 15, 2019. What is her penalty?
Julie's total penalty is $9: Her late penalty until July 15 is $6 [0.5% x 3 x $400 = $6]. Her late penalty from July to October 15 is $3 [0.5% x 3 x $200 = $3].
Lew Quarter (69) is single. His only income for the year was $23,000 in interest and $10,000 in dividends. What is his maximum allowable IRA contribution?
Lew's maximum allowable IRA contribution is $0, because he had no earned income and all his income is unearned income.
David and Lynette had been married for 53 years. David died on March 2, 2018. Lynette did not remarry. What filing status should she use for 2018?
MFJ
Laura is married. Her husband, Alan, moved out in October of 2018. Her son, Edward, is her qualifying child. She lived together with Edward for all of 2018. Laura pays more than 50% of the cost of maintaining their home. Can Laura file as head of household?
No, Laura does not qualify since her husband was not out of the home for the last six months of the year.
Pat and Geri Dale are filing a joint return and have an adjusted gross income of $124,000 and three qualifying children. Two of the children were under age 17 at the end of 2018, and the other is 18. How much, if any, CTC/ODC will they have?
Their AGI is below the $400,000 threshold for married filing jointly. As such, they will have a CTC/ODC of $4,500 [(2 x $2,000) + 500 = $4,500].
Alice Keeler is divorced. Her daughter, Janet (5), lived with her all year. Alice would have been able to claim the dependency exemption for Janet except that she signed a waiver allowing her ex-husband to do so. While she was working, Alice sent her daughter to the Kiddy Care Center. Can she claim CDCC (Child and Dependent Care Credit)?
Yes. Alice qualifies under the divorced parents rules to claim the Child and Dependent Care Credit, because she is the custodial parent.
Anita (42) is a married taxpayer. Her husband, Mark (43), has not lived with her since 2015 and Anita is considered unmarried for tax purposes, filing head of household. Anita's earned income and AGI was $28,478, all from wages. She had no other income. Anita has one dependent daughter, Samantha (14). Anita and Samantha lived together in 2018, and no one else lived with them. Both are U.S. citizens. Can she claim EITC?`
Yes. Anita would receive $1,893 in EITC.
Colin has a successful consulting business, and had a net profit of $86,394 on his Schedule C. How much self-employment tax will he pay?
$12,207. His net profit is $86,394 × 92.35% = $79,785; $79,785 × 15.3% = $12,207.
Ronald works as a counselor at Your City High School. In 2018, he purchased college testing software for use by his senior college-bound students. The software cost him $195. He was not reimbursed by the school. He works over 1,400 hours each year. How much, if any, educator expense can he deduct?
$195. Ronald qualifies for the educator expense deduction because he worked over 1,400 hours as a counselor of a high school, and the software purchased is a qualified expense.
Curtis (71) and Shirley (64) are married filing jointly with gross income of $25,370. What is their gross income filing requirement amount?
$25,300 (This is the gross income filing requirement for married filing jointly taxpayers when one taxpayer is age 65 or older).
For 2018, Samara has adjusted gross income of $47,500. What is Samara's AGI threshold in order to deduct medical expenses on Schedule A?
$3,563. The threshold on medical expenses is 7.5% of AGI [$47,500 x .075].
Dan paid $1,000 for a seat at a charity event held to benefit his state university. The value of this was $100. How much may he deduct on his tax return?
$900. Dan may deduct up to the face value of the ticket [$1,000 - $100 = $900).
Barbara Bui is a part-time student and is not working toward a degree. For 2018, her tuition was $1,500, and her books cost $145. Barbara lives at home with her parents and does not have room and board expenses. Barbara received a tuition scholarship of $1,000. How much, if any, of her scholarship income is taxable?
All of Barbara's scholarship is taxable, because she is not a degree candidate.
George and Ingrid were married for ten years before Ingrid died in 2016. George has a dependent daughter, Alice, who lived with him all year long. George remarried in January 2018. Unfortunately, his marriage did not last, and he was divorced in November of 2018. What filing status will George use for 2016, 2017, and 2018?
In 2016, George filed his tax return as married filing jointly. In 2017, he filed his tax return as qualifying widower. Now in 2018, George may either file his return as single or head of household. He may no longer use the qualifying widow(er) status, because he remarried in 2018.
Lisa Dougherty is claimed as a dependent by her mother, Florence. Lisa paid most of her own college expenses. Is Lisa eligible to claim the AOTC?
Ineligible. Lisa may not claim an education credit, because she is a dependent. Florence may claim an education credit for all of Lisa's qualified expenses.
In what situation would a Request for Innocent Spouse Relief be filed?
Innocent spouse relief can only be requested after a joint return has been filed and it is discovered that one spouse has understated the income (or overstated a deduction or credit). Form 8857 is filed for innocent spouse relief by the taxpayer who was unaware of the understatement of income or overstatement of a deduction or credit.
Thelma lived apart from her husband for all of 2018 and does not wish to file a joint return. She paid the entire cost of maintaining her home in Paducah, Kentucky. She maintains a room in the home for her dependent daughter, Daphne, who is currently attending college in Los Angeles, where she shares a dorm room with two other students. Most of Daphne's belongings remain at Thelma's home. Daphne seldom visits her father and does not keep any of her belongings at his home. Can Thelma file as head of household?
It is clear from the circumstances that Daphne's principal place of abode is Thelma's home. Since Thelma meets the qualifications to be considered unmarried for tax purposes, she may file as head of household.
Jalen and his brothers purchased an apartment building together. Jalen's ownership percentage in the activity is 8.3%. Because Jalen lives closest to the property, he collects the monthly rent, signs contracts with tenants, and chooses contractors to make minor repairs. Occasionally, he does repair work himself. Jalen and his brothers make decisions together on major expenditures. Is Jalen an active participant for this rental activity?
Jalen is not an active participant for this activity because he owns less than 10% of the activity.
Dale (25) is single. His brother, Jeff (27), lived with him for all of 2018. Jeff earned $3,100, all from wages, and had no other income. Dale provided more than half of Jeff's support. Jeff is not permanently or totally disabled. No one else lived with Dale. Can Dale claim Jeff as a qualifying relative?
Jeff meets all of the tests for a qualifying relative.
Scott has a son, Jeremy, who is 17 years old at the end of 2018. Jeremy is a citizen of the United States and qualifies as a dependent on Scott's 2018 tax return. Can Scott claim CTC for Jeremy?
Jeremy is not a qualifying child for the Child Tax Credit because he was not under age 17 at the end of 2018.
Jim (48) and Sally (51) Spencer are married and filing a joint return for 2018. Jim earned $35,000, and Sally earned $2,500. How much can they each contribute to an IRA?
Jim may contribute up to $5,500 to his IRA for 2018. If Jim contributes the $5,500, Sally's compensation for IRA purposes is $32,000 [$35,000 + $2,500 - $5,500 = $32,000]. The Spencers may contribute up to $6,500 to Sally's IRA for 2018.
Jovita Bronson (41) is divorced. Her income for the year consisted of $1,000 in interest and $12,000 in alimony from a divorce decree entered prior to January 1, 2019. What is her maximum allowable traditional IRA contribution?
Jovita's maximum allowable traditional IRA contribution is $5,500. For 2018 returns, alimony is considered compensation for traditional IRA purposes.
Markus Kleen (16) is a dependent on his parents' return. He is single, he is not legally blind, and his gross income for the year is $1,400 [$900 earned income + $500 unearned income]. Is Markus required to file a tax return?
Markus is required to file a return because his gross income of $1,400 is greater than his gross income threshold amount of $1,250. When determining if Markus is required to file a return, his unearned income is below the $1,050 threshold amount, and his earned income is also below the $12,000 threshold amount. When applying the gross income threshold, first determine if the maximum threshold amount is the greater of $1,050 or Markus' earned income plus $350. Because Markus' earned income is $900, his gross income threshold amount is set at $1,250 [$900 + $350 = $1,250].
Michael and Jenna entered into a common-law marriage in 2012. They have not divorced. Neither Michael nor Jenna have dependents they could claim for 2018. Michael does not know the whereabouts of Jenna and has not spoken with her in two years. What filing status should Michael use?
Michael must file as married filing separately.
Mona and Jeff are married and file a joint return. They jointly own a ten-lot mobile home park, located in another state. They hired the McMahan Group to manage the property. The McMahan Group is responsible for collecting rent payments monthly and hiring contractors for routine maintenance of the property, including lawn care and snow removal. Mona and Jeff determine the rent prices, approve major expenditures, and visit the property twice a year. Are Mona and Jeff active participants for this rental activity?
Mona and Jeff are active participants for this rental activity. They own 100% of the activity and make the management decisions. Hiring a third party to collect the rent and arrange for repairs does not change their status.
Megan (27) is single. Her cousin, Pam (29), moved in with her in February of 2018. Pam earned $3,600, all from wages, and had no other income. Megan provided 60% of Pam's support. Pam is not permanently or totally disabled. No one else lived with Megan. Is Pam QC, QR, or neither?
Neither. Pam did not live with Megan the entire year, and cousins do not meet the relationship test for qualifying child or relative.
Martin is single. His mother, Agnes (61), came to live with him in August of 2018. Agnes earned $14,100, all from wages, and had no other income. Martin provided 25% of Agnes' support. Agnes is not permanently or totally disabled. No one else lived with Martin. Can Agnes be claimed as a dependent by Martin?
No. Agnes did not meet the qualifying relative gross income and support tests to claim Agnes as a qualifying relative dependent on his return.
Juan (52) is filing as a single taxpayer with no dependents. Juan's earned income and AGI in 2018 was $15,281, all from wages. He had no other income. Juan is a U.S. citizen. Can he claim EITC?
No. Juan's income was greater than $15,269.
Lorelei (29) and Sean (28) are married taxpayers, filing a joint return. Lorelei's income from wages was $18,871. Sean's income from wages was $10,465. They had $88 of interest income from their checking account. They had no other income in 2018. Lorelei and Sean are expecting their first child in June of 2019. Both are U.S. citizens. Can they claim EITC?
No. Lorelei and Sean have a combined income greater than $20,949.
Rosalee (19) is filing as a single taxpayer with no dependents. Rosalee's earned income and AGI in 2018 was $8,974, all from wages. She had no other income. She is a U.S. citizen. Can she claim EITC?
No. Rosalee is not between the ages of 25 and 65.
Sidney and Stella Anderson have a dependent daughter, Andrea (8). Sidney works full-time, and Stella is extensively involved in charity work. They paid the Daily Child Care Center to take care of Andrea while Stella worked for various charitable organizations. Stella did not receive any compensation for her work. The Andersons will file a joint return. Can they claim the CDCC?
No. The Andersons may not claim the Child and Dependent Care Credit, because Stella had no earned income.
Mr. and Mrs. Takashima both work. They pay their 18-year-old son, Mike, to care for his little brother, Sam (11), while they are working. Sam is their dependent, but Mike did not live with them, and they are not claiming him as a dependent. Can they claim the CDCC?
No. The Takashimas may not claim the Child and Dependent Care Credit for the amount they paid their son, who, although not a dependent, was under age 19.
Single, dependent (age 18) of another taxpayer, gross income $5,650, all from wages. Is he required to file?
No. The dependent taxpayer's earned income is less than $12,000 and the gross income, filing single, is less than $6,000 [$5,650 earned income + $350].
Kaitlyn is single. Her friend, Leah, is her qualifying relative. Kaitlyn and Leah lived together for all of 2018. Kaitlyn pays more than 50% of the cost of maintaining their home. Can Kaitlyn file as head of household?
No; a qualifying relative does not qualify a taxpayer for head of household unless they meet one of the relationship tests. Since Leah is not related to Kaitlyn, the relationship test is not met.
Darren and Misty were married for five years before Darren's passing in 2016. Misty paid all of the costs of maintaining a home for herself and her dependent son, Vincent. Vincent moved out of the home in November of 2018. Misty filed a joint return for 2016. Misty has not remarried. Can Misty file as Qualified Widow for 2018?
No; since Vincent did not live with Misty for the entire year, Misty does not qualify to file as a QW. Misty will file as HH.
Alberto Jimenez is a degree candidate. For 2018, his tuition was $5,000, his other required course fees were $1,200, and his room and board were $2,700. Alberto received a $2,500 scholarship that does not specify the expenses to which it must be applied. How much, if any, of his scholarship income is taxable?
None of Alberto's scholarship is taxable. He is a degree candidate where his $5,000 tuition expense and his other required course fees of $1,200 exceeded his $2,500 scholarship received.
Norman (34) is married, filing a separate return, and reports that his spouse itemized her deductions this year. Norman's total allowable itemized deductions are $2,505. Should Norman take the standard deduction or the itemized deduction?
Norman should itemize because his spouse did so. Otherwise, his standard deduction is $0.
George and Amanda are married and adopted a daughter, Sue Linn (4). The adoption was finalized in February of 2018, and Sue Linn came to live with George and Amanda that same month. Sue Linn had no income and did not provide half of her own support. Is Sue Linn QC, QD, or Neither.
QC. An adoptive daughter is treated the same as a birth daughter would be treated. Sue Linn meets all of the tests for a qualifying child.
Harold and Helen are married and have a son, Hank (22). Hank is a full-time student at Your City College. Hank earned $4,000, all from wages, and had no other income. Harold and Helen provided 40% of Hank's support, and his grandma also provided 40% of Hank's support. Hank lives on campus while school is in session. During the summer, Hank lives with Harold and Helen. Hank provided 20% of his own support. Is Hank QC, QR, or neither?
QC. Hank meets all of the tests for a qualifying child.
Teresa is single. Her daughter, Roberta (21), lived with her for all of 2018. Roberta is not a full-time student. Roberta earned $1,800, all from wages, and had no other income. Teresa provided 75% of Roberta's support. Roberta is not permanently or totally disabled. No one else lived with Teresa. Is Roberta QC, QR, or Neither?
QR. Roberta does not qualify as a qualifying child, because her age is over 18 and she is not a full-time student. She does, however, meet all of the tests for a qualifying relative.
Ray (54) and Regina (48) Moore will file a joint return. Ray earned $38,000 in wages. He would like to contribute and deduct the largest allowable IRA amount. Regina earned $31,000 in wages. She also would like to contribute and deduct the largest allowable amount. What is their individual maximum deduction?
Ray's traditional IRA deduction is $6,500. Regina's traditional IRA deduction is $5,500. Their total deduction is $12,000.
Rex Berry is divorced. His former wife, Jackie, has custody of Jeff, their son, and claims him as a dependent. Rex paid a $350 doctor bill for Jeff when Jeff fell and broke his arm. May Rex deduct this expense?
Rex may deduct this medical expense. Each parent may deduct the medical expenses they paid for the child. Children of divorced or separated parents can be treated as a dependent of both parents for purposes of deducting medical expenses.
Rhonda married Jake in 2018. Jake has not been paying on his student loans and they are in default. He owes a few thousand dollars on them still. Rhonda is not legally obligated to pay his student loans. She worked all year and had income tax withheld. She wants to receive her portion of their tax refund. What should she do?
Rhonda would file Form 8379 with their tax return to request her injured spouse allocation.
Roger Williams (54) is single and earned $2,850 in wages. Because he has a large amount of investment income, he would like to contribute and deduct the largest allowable IRA amount to help reduce his tax liability. He has not yet made a contribution, but will do so before the due date of his return. What is his maximum traditional IRA deduction?
Roger's maximum traditional IRA deduction is $2,850.
Sandi Teckenbrock purchased a home for $148,000. She added a new room at a cost of $9,500 and a deck for $3,000. What is Sandi's basis?
Sandi's basis is: $160,500 [$148,000 + $9,500 + $3,000].
In 2018, Margie and David were married and lived with their dependent son, Andrew, from January 1 until June 30. On July 1, David moved out of the home and filed for divorce. On December 1, their divorce was granted, and Margie was awarded residential custody of Andrew. After the separation, in 2018, Andrew spent 62 nights with Margie and 62 nights with David. He also spent 61 nights with his grandmother. Margie's AGI was $42,000, David's AGI was $46,500, and the grandmother's AGI was $58,900. Who may claim Andrew as a dependent?
Since Andrew spent an equal amount of time with Margie and David, David is the custodial parent eligible to claim Andrew as a qualifying child based on the tiebreaker rules, because he has the higher AGI.
Joe and Mary have been married for two years. Mary died on June 5, 2018. On October 15, 2018, Joe got married to Jane. What filing status will Joe and Jane use, and what filing status will Mary use for 2018?
Since Joe and Jane were married as of the last day of the tax year, they may file MFJ or MFS. Assuming Mary is required to file a final tax return, that return will be filed using the MFS filing status.
Mike (33) and Janet (34) are not married but lived together for all of 2018. Mike provided the total support of the home, as Janet had no income. Living with them all year were Janet's two children, Tim (12) and Sally (9). Neither child had any income. Sally's father is Mike's brother. When Mike files his return, will Sally qualify as his QC, QR, or neither?
Since Sally is Mike's niece and meets all other requirements, Sally is Mike's qualifying child.
Sean and Cynthia were divorced on September 21, 2018. Neither had dependents they could claim for 2018. What filing status should they each use?
Single
Carolyn earned $52,000 as a full-time employee in 2018. Due to procrastination and denial, she did not prepare her 2018 income tax return until June 23, 2019. Carolyn did not file the return until August 1, 2019. She did not request an extension of time to file. Her return showed a balance due of $1,500. What is her penalty?
The IRS assesses a late filing penalty for four months. Carolyn's penalty is $300 [5% x 4 x $1,500].
James Kennedy took a chance one day and bought a $1 scratch-off. It was his lucky day, because he won $100,000! How much of a withholding will James have to report?
The IRS requires a mandatory 24% withholding on winnings that exceed $5,000. James received a check for $76,000 and has $24,000 of withholding to report. James's Form W-2G is shown below.
Ron (35) and Sue (35) are married and have two children, Todd (8) and Tracy (6). Neither child has income. Stacy (13), Sue's child from a previous marriage, came to live with them on July 4, 2018. Prior to moving in with Ron and Sue, Stacy was supported by and lived with her father. Who, if anyone, can be a QC or QR for Ron and Sue?
Todd and Tracy are qualifying children of Ron and Sue. Stacy is neither a qualifying child nor a qualifying relative of Ron and Sue. Because she lived with her father for more than six months, she cannot be a qualifying child for Sue (residency test) and is not a qualifying relative of Ron and Sue (qualifying child test).
Tom (27) and Toni (23) Nichols will file a joint return. Tom earned $40,000 in wages. Toni is a college student and had no compensation. They would like to contribute and deduct the largest allowable IRA amounts. How much can they deduct?
Tom's traditional IRA deduction could be as much as $5,500. Toni's traditional IRA deduction could be as much as $5,500. Their total traditional IRA deduction is $11,000.
Tony and Adam are cousins. Adam is a qualified relative dependent of Tony. Can Tony file as Head of Household?
Tony may not file as head of household because their relationship as cousins does not meet the head of household relationship test. Unless Tony has another qualifying child or another relative that meets the relationship test for qualifying relative, he cannot claim head of household. Tony must file as single.
In 2018, Tony received a $580 federal income tax refund from his 2017 income tax return. The IRS deposited his refund directly into his checking account. Is this refund taxable or nontaxable?
Tony's 2017 federal income tax refund, which he received in 2018, is nontaxable and not reported on his income tax return.
Jared Peterson, dependent son of Beverly Peterson, was born on January 1, 2002; his 17th birthday is January 1, 2019. Can Beverly claim CTC for Jared for 2018?
When determining whether Beverly may claim the Child Tax Credit, Jared is considered to be 16 years old on December 31, 2018. However, for general tax purposes, Jared is considered to have attained the age of 17 as of December 31, 2018.
Harold and Betsy Atkinson have a son, Stewart (4). Harold abandoned the family, moving out of the home on April 20. Betsy began working on May 4. She paid Baby Watchers to take care of Stewart while she worked. She is not filing jointly with her husband, and she is claiming Stewart as her dependent. Can she claim the CDCC?
Yes. Betsy may claim the Child and Dependent Care Credit based on the amount she paid from May 4 through December 31, because she lived with her son, and her spouse did not live in the home the last six months of the year. Betsy will file using the head of household filing status. However, note that, should she decide to file as married filing separately, she will not be eligible to claim the credit.
Christine Williams' husband, Henry, was disabled and unable to care for himself for the entire year. Christine hired a nurse to care for him in their home while she was at work. They will file a joint return. Can they claim the CDCC?
Yes. Christine and Henry may claim the Child and Dependent Care Credit, because Henry is incapable of self-care.
Gloria Richards is divorced. She pays her mother, Janet, to take care of her eight-year-old dependent son after school while Gloria is at work. Janet, who provides all her own support, cares for her grandson in her own home. Can she claim the CDCC?
Yes. Gloria may claim the Child and Dependent Care Credit expenses because her child care provider is not her dependent.
Marty (24) is a single taxpayer, filing head of household, with one dependent, Mindy (2). Mindy is Marty's daughter, and she lived with him for all of 2018. No one else lived with Marty. Marty's earned income and AGI was $23,457, all from wages. He had no other income. Both Marty and Mindy are U.S. citizens. Marty is not a full-time student. Can he claim EITC?
Yes. He would receive $2,692 in EITC.
Ronald (28) is filing as a single taxpayer with no dependents. Ronald's earned income and AGI in 2018 was $10,281, all from wages. He had no other income. He is a U.S. citizen. Can Ronald claim EITC?
Yes. He would receive $382 in EITC.
Jim and Mary McGraw have two dependent children, Tom (10) and Dana (4). Jim worked all year. Mary looked for a job in July and worked from August through December. They paid a babysitter to care for the children from July through December. The McGraws will file a joint return. Can they claim the CDCC?
Yes. The McGraws may claim the Child and Dependent Care Credit based on the amount paid in July while Mary looked for work, and from August through December while they both were gainfully employed.
Single, dependent (age 2) of another taxpayer, gross income $1,150, all from interest. Is she required to file?
Yes. The dependent taxpayer's unearned income, filing single, was greater than $1,050. The parents may choose to report this income on their tax return rather than complete a separate return for their child.
June (72) is married filing jointly and living apart from her spouse. She has gross income $4,150. Is she required to file?
Yes. The gross income is above the filing requirement of $5.
Ernest (45) and Teresa (41) are married taxpayers, filing a joint return. Ernest's income from wages was $23,457. Teresa's income from wages was $18,293. They had $144 of interest income from a money market account. Their AGI was $41,894. They had no other income in 2018. Ernest and Teresa have two dependent sons, Michael (17) and Connor (15). They all lived together in 2018, and no one else lived with them. Ernest, Teresa, Michael, and Connor are all U.S. citizens. Can they claim EITC?
Yes. Their combined earned income of $41,750 and AGI of $41,894 would allow them to receive $2,025 in EITC.
Junichi (34) and Mariko (32) are married taxpayers, filing a joint return. Junichi's gross income from wages was $34,281. Mariko had no income in 2018. They had no other income in 2018. Junichi and Mariko have one dependent daughter, Sakiko (4). They all lived together in 2018, and no one else lived with them. Junichi, Mariko, and Sakiko are all U.S. citizens. Can they claim EITC?
Yes. They would receive $1,875 in EITC.
Wanda is single. Her mother, Anita, is her qualifying relative. Anita lived in her own home apart from Wanda for all of 2018. Wanda pays more than 50% of the cost of maintaining Anita's home each year. Can Wanda file as head of household?
Yes. Wanda qualifies, since Anita is a parent. Since parents do not have to live with the taxpayer to be a dependent, as long as they provide more the 50% of their parent's support, Wanda meets the head of household requirements.
