Prepare a schedule that lists the components of and calculates the personal and dependent exemption amount (based on current year exemption and dependency amount) that would be included on the Brock's individual tax return based on the following information:
The Brock's are married with three children: David, Jennifer and Ashley ages 17, 14 and 10, respectively.
The Brock's oldest child, David, has a part-time job that paid total wages of $3,500 for the year.
Jennifer was fortunate to participate in a program that allowed her to study abroad for 9 months of the tax year.
James Brock's father, William, lives year-around with the Brock's in an in-law apartment. William retired from a major defense contractor two years ago and receives a pension in the amount of $1,800 per month, collects Social Security benefits of $1,700 per month and has a part-time job at a local country club in their pro shop. William earns $9,000 during the nine months per year the pro shop is open.
The Brock's spend $350 each month in support of William. This support is limited to food and utilities. William spends $850 per month on medical expenses, clothing, and tuition for a community college where he is taking classes toward a degree in literature.
Pamela Brock is blind. She has a field of vision of 20 degrees. She has a full-time job.
The Brock's are in the process of adopting a child; however, the adoption process is not yet complete.
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To calculate the personal and dependent exemption amount for Brock's individual tax return, we need to consider the following components:
1. Personal Exemption: Each taxpayer, including both Pamela and James Brock, is entitled to a personal exemption amount. However, since Pamela is blind, she may be eligible for an increased exemption amount for the visually impaired. The specific exemption amount for the current year can be found in the IRS publications or on their website.
2. Dependency Exemption: For each dependent, including David, Jennifer, Ashley, and potentially the adopted child in the future, the Brock's can claim a dependency exemption amount. However, we need to determine if each child meets the criteria to be claimed as a dependent.
a. Relationship Test: David, Jennifer, and Ashley meet the relationship test since they are the Brock's children. The adopted child, once the adoption process is complete, may also meet this test.
b. Age Test: David, Jennifer, and Ashley's ages of 17, 14, and 10, respectively, meet the age test for dependency. The age limit is generally below 19 (or 24 for full-time students).
c. Residency Test: Since no specific information about residency is provided, it is assumed that all children reside with the Brock's for more than half of the year. They meet the residency test.
d. Support Test: The Brock's need to provide more than half of each child's support in order to claim them as dependents. No information is given about the support provided for David, Jennifer, and Ashley, so we assume they meet this test.
3. Miscellaneous Factors:
a. Income of Dependents: David has part-time job wages of $3,500. This income needs to be below a certain threshold to qualify as a dependent. These thresholds can be found in IRS publications or on their website.
b. Student Abroad: Jennifer studied abroad for 9 months. If she meets the requirements, she may still be considered a dependent.
c. Support for William: To claim William as a dependent, the Brock's need to provide more than half of his support. The support provided includes food and utilities, which amounts to $350 per month.
d. Medical Expenses and Other Costs for William: William's medical expenses, clothing, and community college tuition would not be considered support provided by the Brock's.
To calculate the personal and dependent exemption amount accurately, further information would be necessary, such as the specific exemption amounts for the current year, income thresholds for dependent qualification, and details about Jennifer's student status.