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12 May, 12:20

Sarah is the Colton family's 23-year-old daughter. She is a full-time student at an out-of-state university (for 8 months of the year) but plans to return home when the school year ends. During the year, Sarah earned $4,500 of income working part-time. Her support totaled $20,000 for the year. Of this amount, Sarah paid $7,000 with her own funds, her parents paid $12,000, and Sarah's grandparents paid $1,000. Which of the following statements most accurately describes whether Sarah's parents can claim a dependency exemption for her?

A. Yes, Sarah is a qualifying child of her parents.

B. No, Sarah fails the support test for both qualifying children and qualifying relatives

C. No, Sarah does not pass the gross income test

D. Yes, Sarah is a qualifying relative of her parents

E. None of the Above

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  1. 12 May, 14:51
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    The correct answer is option A, Yes Sarah is a qualifying child of her parents.

    Explanation:

    Sara studies at a university which is not in her own home state. She live in the other state for studying. She stays there for 8 months in a year. During the year, Sarah earned $4500 of income working part time. Her support totaled $20000 out of which she paid $7000 and her parents paid $12000 and her grandparents paid $1000. This means that Sarah did not provide more than even half of the support. She is a full time student, and also less than 24 years in age. So she is the qualifying child for her parents.
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