Explanation
a.
Alimony received: $1,200 per month × 12 months = $14,400
Gift from mother = $3,000 gift excluded from income
Disability insurance payments: $800 of $2,000 (40%) of payment excluded because taxpayer paid 40% of premium on insurance policy = $1,200
Moving expenses: $2,010 (for moving company) + $200 (for lodging) + $242 for mileage (1,426 miles × .17 cents per mile) = $2,452
Medical expenses: $6,445 − $6,385 [10% × (3)] = $60
Casualty loss deduction: $900 − $100 = $800 − $6,385 [10% × (3)] = $0
Personal and dependency exemptions: One personal and one for Heather. See Note A. below (2 × $4,050) = $8,100
Tax on taxable income: See head of household tax rate schedule; $1,335 + $4,955.70 [15% × ($46,388 − $13,350)] = $6,291
Note A. The first question we have to answer to determine Reba’s filing status is whether she can claim Heather as a dependent. If so, she may qualify for head of household filing status. If not, she will file a single taxpayer.
Does Heather qualify as Reba’s dependent? Yes, as analyzed below.
<span><span>TestIs Heather a qualifying child of Reba?</span><span>RelationshipYes, daughter</span><span>AgeYes, under age 24 and a full- time student (and younger than Reba).</span><span>ResidenceYes, Heather had the same principal residence as Reba for the entire year.</span><span>SupportYes. Heather did not provide more than half of her own support. Her scholarship does not count as support she provided for herself because she is Reba’s child.</span></span>
