1.Grandmother (65 y/o and not blind) lives with her 30 y/o granddaughter “Red.”
ID: 2437207 • Letter: 1
Question
1.Grandmother (65 y/o and not blind) lives with her 30 y/o granddaughter “Red.” Red is not going to school, but instead works as a full-time waitress at Grandmother’s diner. Grandmother provides all of Red’s support and provides her with a home for the entire year. Grandmother’s income consists of the following: salary of 50,000, state bond interest of 10,000, debt forgiveness of 5,000, and dividend interest of 1,000.
a.Is Red a dependent? If so, how does she qualify?
b.What is Grandmother’s filing status?
c.What is her AGI?
(PLEASE SHOW YOUR WORK)
Explanation / Answer
a. Yes she can claim her as dependent assuming her AGI is less than $ 4050 in previous year
b. Her filling status is single
c. State bond interest would be exempted and it is assumed that dividend is qualified not liable for tax. Thus her AGI would be $ 50000 + $ 5000 = $ 55000
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