Prepare your responses assuming that you are working on the 2016 tax year.

For this case, we have a family that consists of Linda age 39, James age 40, Lindas mother Janice age 62, Linda and James son Andrew age 15, and their adopted daughter Sarah age 5. Sarah was adopted in January of the 2016 tax year.

James and Linda each have income from working at jobs where they are classified as employees. They each earn $42,000 per year from their jobs. Janice began collecting Social Security this year. She collected $6,000 in Social Security benefits, and this was her only source of income during the year. Andrew worked part time at a grocery store and earned $5,000. Andrews W-2 showed income tax withheld of $1,000. Sarah does not have any earned income.

James and Linda were legally married in 1998. On April 1, 2016 James decided to move out of the house (not an April Fools joke). Linda has contact information for James, but he has no interest in continuing their relationship. James has continued to pay for half of the mortgage payment on the house and for half of Andrews tuition and education costs. James has indicated that he is not sure what he wants to do except that he does not want to live in the house any longer.

Question 1. (15 points). Discuss the filing status options for Linda and her family. Be sure to address all of the filing status options, including single, MFS, MFJ, and HOH. For each filing status explain whether that filing status is an option for Linda and her family and discuss the advantages and disadvantages of each filing status for Linda and James in this specific case. In addition, list each person (other than Linda and James) in this case and decide whether Linda and/or James is able to claim that person as a dependent. Provide a detailed analysis for each of the persons using the criteria for qualifying child and/or qualifying relative as found in the tax rules. Provide a recommendation for how Linda or Linda and James should file and who they will claim as their dependents.

Question 2. (5 points). Andrew would like to file a tax return because his employer withheld so much income tax. However, he was told that if he files a tax return he will not be able to be claimed as a dependent by his family. Is this correct or incorrect? Will Andrew be able to claim an exemption for himself if he files his own return? Support your answer with appropriate references.

Question 3. (10 points). Consider the situation in question 1, but with two changes. First, assume that James left on April 1, as above, but that no one has heard from James since that time. (Assume that he did not continue to make any payments toward housing or education.) Second, assume that Lindas mother went back to her job as a corporate controller on May 1 and that Linda stayed home with the children. Lindas income for 2016 will be $10,000, and Lindas mothers income for 2016 will be $60,000. Lindas mother uses her income to pay for the costs of the household. For this question indicate the best filing status for Linda and her mother and identify whether she or her mother are able to claim each of the persons in the household as dependents.