Mrs. Vick, a 40-year-old cash basis taxpayer, earned $45,000 as a teacher and $5

Question

Mrs. Vick, a 40-year-old cash basis taxpayer, earned $45,000 as a teacher and $5,000 as a part-time real estate agent in Year 2. Mr. Vick, who died on July 1, Year 2, had been permanently disabled on his job and collected state disability benefits until his death. For all of Year 2 and Year 3, the Vick’s residence was the principal home of both their 11-year old daughter, Joan, and Mrs. Vick’ s unmarried cousin, Fran Phillips, who had no income in either year. During Year 2, Joan received $200 a month in survivor social security benefits that began on August 1, Year 2, and will continue at least until her 18th birthday. In Year 2 and Year 3, Mrs. Vick provided over one-half the support for Joan and Fran, both of whom were U.S. citizens. Mrs. Vick did not remarry.

a) What filing status should the Vicks use for Year 2?

b) What filing status should Mrs. Vick use for Year 3?

c) How many exemptions can the Vicks claim in Year 2?

d) How many exemptions can Mrs. Vick claim in Year 3?

Explanation / Answer

a. Mr. Vick has died in the year 2. Hence, for the year 2, Mrs. Vick should use the filing status as “Qualifying Widow”, as the following criteria are fulfilled;

b. Mrs. Vick can use the filing status for year 3 as “Head of the house hold”, as she has fulfilled the following criteria;

Computation:

After adding all sources of income together, as the amount is above limit of $25000, it is taxable.

2. Qualifying children exemption.

d) Exemption that can be availed by Mr. Vick: (for year 3):

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.