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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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Help - Tax question

Customer Question

Abe is the single 66 year old uncle of Jacob. For the entire calendar year
of 2005, Jacob lived in Abe's home, and Abe provided 65% of the support
for jacob. Abe has salary income of $21,000. Abe's wife passed away in
2004.
Jacobs mother and father also died in 2004. As their surviving child jacob
was named the beneficiary of a life insurance policy. The face amount of
the policy was $100,000 but Jacob elected to receive the payments over a
5 year period, 5 equal payments of $24,000 beginning in 2005. ($4,000
is treated as taxable interest income.)
1a. what is Abe's tax liability or refund for 2005? Clearly indicate Abe's
filing status and the number of allowable exemptions.
1b. Determine Jacob's tax liability.
Submitted: 11 years ago.
Category: Tax
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: oh sorry, thank you very much I will accept them right now
Expert:  Jon Andrews replied 11 years ago.

Does the question state Jacob's age?


jon 

Customer: replied 11 years ago.
Reply to Jon Andrews's Post: No, but I believe you would assume he was a minor
Expert:  Jon Andrews replied 11 years ago.

The tax liability/refund will depend, in part, on whether Abe had any income tax withheld from his salary or if he got advance earned income credit, etc. Assuming that there was no tax withheld or advance EIC, his net tax will be 0 and he will get a refund based on earned income credit. I am unable to determine the exact amount because I do not have the tables for 2005 yet.


Abe's filing status will be "head of household" and the number of exemptions will be 2.


Jacob's tax liability will be approximately $200.


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