During your annual tax preparation meeting, Mary announced that she will be moving into her own apartment
Question:
During your annual tax preparation meeting, Mary announced that she will be moving into her own apartment during the next year. As you congratulated her, she indicated that her father was not very happy about losing his tax credits.
When questioned about this statement, Mary indicated that her father had been claiming Mary and her daughter Livvie as his dependents.
Additional Background
Mary, 24, is a single mother who cares for her 4-year-old daughter, Livvie. Mary sporadically receives small monthly payments from Livvie's father to help with costs for Livvie's care. Livvie doesn’t spend any time with her father.
Mary is an independent contractor and earns income of $9,000 from tutoring college students. Mary lives with her parents and pays them a fair amount each month for rent. Mary has been saving her income so that she can move into her own apartment with Livvie. Mary has paid for Livvie's clothing and food, and has taken Livvie on vacation trips to Disney and other kid-friendly resorts.
Mary's parents, Livvie's grandparents, have been spoiling their granddaughter with toys and presents and have taken care of Livvie when Mary is working.
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Research the rules concerning dependents, and determine who has the right to make a claim for dependents during the past tax year (Mary or her parents). State your assumptions.
APPLICABLE LAW: Discuss ALL those laws that relate to the facts and may impact the position taken. This includes codes, regs, rulings, court case findings and any precedent that might affect the case. It is imperative that positive AND negative laws be addressed to enable thorough analysis and selection of appropriate options.
In identifying the law, present the evidence as it relates to the issues.
ANALYSIS: Apply each of the identified laws to the facts and address all facets of the issues. Present each possible option with all the ramifications of each as it pertains to the situation. (it is irrelevant to discuss the regulations regarding the dependency of an elderly parent if the issue pertains to claiming a cousin residing in Uraguay)
CONCLUSION: This section provides the “best fit” resolutions to the situation and may offer absolute eliminations because of legal positions BUT should not make a final selection. The purpose of this section is to provide recommended options with the supporting evidence from which the client shall determine his course of action.
Expert Answer:
Mary can claim herself and her daughter on her taxes Marys parents cannot claim Mary or her child St... View the full answer
