Federal Taxation Essay

Lucas invests in foreign stocks and bonds in an attempt to reduce his taxes. This is not an effective approach because of possible double taxation. The US offers a foreign tax credit, but retirement accounts are not eligible since they are not taxed in the US. Furthermore the rates vary between countries and a little homework needs to be done before investing in this venue. 10-Abigail is a widow who is age 80 and blind and is claimed as dependant by her grandson. * Yes Abigail can file a federal income tax return depending on her income.

When filing her own return, Abigail’s standard deduction will be limited to the greater of $950 (2012) or the sum of her earned income plus $300. However if this exceeds the standard deduction she will be limited to the basic standard deduction. She will be allowed the additional deductions for being over 65 and blind. 13-Patsy maintains a household that includes her son (30) and her cousin (28). She can claim her cousin by not her son. Her son does not qualify because of the ‘Age Test’ a qualifying child must be under 19 (24 if a student). 5- Caden could not claim Lily as his dependant on his 2011 income tax return because she was still his spouse. 24- In connection with the application of the “kiddie tax” comment on these: If the child generates only earned income, and if that income does not exceed half his/her support then the kiddie tax can apply If the child’s modest amount of unearned income does not exceed $1900. 30- Compute the taxable income for 2012 for Aiden on the basis of the following information.

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