hi all,
i need some clarification on the question below:
Question CPA-01415
Jim and Kay Ross contributed to the support of their two children, Dale and Kim, and Jim's widowed parent, Grant. For Year 27, Dale, a 19-year-old full-time college student, earned $4,500 as a babysitter. Kim, a 23-year-old bank teller, earned $12,000. Grant received $5,000 in dividend income and $4,000 in nontaxable Social Security benefits. Grant and Kim are U.S. citizens and were over one-half supported by Jim and Kay, but neither of the two currently reside with Jim and Kay. Dale's main place of residence is with Jim and Kay, and he is currently on a temporary absence to attend school. How many exemptions can Jim and Kay claim on their Year 27 joint income tax return?
A. Two
B. Three
C. Four
D. Five
Explanation
Choice “B” is correct. Taxpayers are now entitled to an exemption for each qualifying child and qualifying relative (two tests are “CARES” or “SUPORT”). For Dale, he does meet the residency requirement because there is an exception for a temporary absence while attending school. Therefore, he is a qualifying child under the CARES test. Kim does not qualify as a qualifying child (CARES test) because, although she is under age 24, she is not a full-time student. Therefore, the income limitations of the SUPORT test apply, and she does not qualify under that test either. Likewise, Grant's taxable income of $5,000 exceeds the minimum. Thus, 3 total exemptions can be claimed (Jim, Kay, and Dale).
Please help me understand what is the “minimum” thats being referred to when are looking at income earned by Grant? My reasoning is that answer should be 4 and Grant should be included because his $5000 of taxable dividend income is less than the personal exemption amount and the standard deduction amount combined thus his income is under the specific amount of taxable gross income.
Thanks.
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