Tax Letter

This letter is in response to your request for advice regarding Van claiming Debra as a qualified child for income tax purposes. My conclusions below in this letter are based upon the information you provided at the Chamber of Commerce meeting. Please advise of any changes to the facts, as that may affect my conclusions listed below.

Pursuant to §§ 24 of the Internal Revenue Code, Debra can be listed as a qualified child for income tax purposes for Van since they meet the abode, age, and relationship tests. With Van's income being under the threshold amount of $75,000 under Code §§ 24, he qualifies to list Debra as his dependent for tax purposes. Please note that there is a penalty of $50 for every $1,000 over the threshold of $75,000 for every qualified child claimed. Given your approximate combined income of $400,000, this would amount to a total penalty of $16,250 if you were to claim Debra for yourselves. It is in your best interest to allow Van to claim Debra on his income taxes.

Since Van would be claiming Debra as his only qualified child, the rate of tax will be 34%. This can be found in Code §§ 32(b)(2)(A).

After reviewing Debra's qualifications as listed in Code §§ 152(c)(1), she meets the requirements for Van to successfully claim her as a qualified child.

Should you need more information or need to clarify my conclusions, please do not hesitate to contact me.