Problem
Answer the following five questions as completely as you can. However, please focus only on what is being asked. There is no need to go off on tangents or discuss contingencies not referenced in the question. You should cite appropriate language from the instructions to support your answers.
All the information you need is contained in the IRS instructions for the completion of Form 1040. There is no need to research or cite other sources. You may access the IRS Instructions for Form 1040.
A. Tina is 22 years old. She lives with her father and mother, David and Samantha. Tina is a full time student at Ultimate University. However, she also works some night and weekend hours at the local library. In all, she earns about $300 per week. She saves some of this money and uses the rest on nights out and other entertainment. Her basic needs are seen to mainly by her parents. All 3 people are U.S. citizens. May David and Samantha claim Tina as a dependent?
B. Jeremy buys 2,000 shares of Apple (a public company) on March 1. He holds the stock for the rest of the year. During the year, Jeremy received $3,000 in dividends from the Apple stock. Are these dividends "qualified" dividends (for purpose of qualifying for the lower dividend tax rate) or not?
C. Assume that Jen has an individual retirement account (IRA) at Fidelity Investments and that she receives a distribution from that IRA. What is the name of the form that she should receive from Fidelity that will tell him how much of her distribution must be reported on her income tax return?
D. Brian works at a local hospital. He lives 30 miles away from the hospital. However, one day, his supervisor tells him that he must move closer to the hospital so as to be able to make it to work faster in the event of an emergency. Therefore, he packs up and moves to within one mile of the hospital. May Briam deduct the cost of the moving expenses on his income tax return?
E. Assume that in State A, only someone earning under $15,000 per year is eligible for Medicaid. One year, Lillian earned $13,500 and so was eligible for, and received, Medicaid assistance. However, because of the "earned income tax credit," he received an extra $2,000 from the IRS and thus, in effect, earned $15,500. Is she now no longer eligible for Medicaid because she earns too much?