Advanced Scenario 5: Fran Emerson

Interview Notes Frans husband died in March 2017. Fran filed a joint return with her husband for 2017. She has not remarried. Fran provided the entire cost of maintaining the household and all the support for her children, Meredith and Oliver, in 2018. Frans older brother, Howard, lives with her and is permanently and totally disabled. He received disability income which he used to provide more than half of his own support. Oliver attended day care while Fran worked. In September 2018, Frans daughter, Meredith, enrolled in college to pursue a bachelors degree. She had no previous post-secondary education. Yuma College is a qualified educational institution. Meredith does not have a felony drug conviction. Fran brought a Form 1098-T and an account statement from the college. Merediths purchases at the college bookstore were for course-related books. The terms of Merediths scholarship require that it be used to pay for tuition. Fran took a distribution from her IRA and used all of the distribution to pay for some of Merediths education expenses. All her IRA contributions were deductible in the year she made them. Fran received a Form 1099-C for cancelled credit card debt. Using the insolvency determination worksheet in Publication 4012, you helped Fran determine the value of her assets exceeded her liabilities and that she was solvent at the time the credit card debt was cancelled. Fran did not have minimum essential healthcare coverage (MEC) all year and does not qualify for any exemption. Meredith, Oliver, and Howard each had MEC all year.

10.Head of Household is Frans most advantageous filing status. True False

11.How many qualifying persons does Fran have for the earned income credit? A. 0 B. 1 C. 2 D. 3 12.What is the amount of the child and dependent care credit Fran can claim on Form 2441, Child and Dependent Care Expenses? $________.

13. The total amount of qualified educational expenses used in the calculation of Frans 2018 American opportunity credit is: A.$3,300 B.$3,825 C.$4,000 D.$4,220 14.What is the amount of Frans individual shared responsibility payment? $________.

15.What is the amount of Frans federal withholding? $________.

16.Fran's cancelled debt from Form 1099-C, Cancellation of Debt, must be included on her federal income tax return as other income. True False

17.Fran can use the higher education expenses exception to avoid the 10% additional tax on the early distribution from her IRA on Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax- Favored Accounts. True False