To determine how many qualifying dependents Karl can claim on his tax return as head of household, we must evaluate who meets the criteria for being a dependent according to IRS rules.
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Qualifying Child Test: A qualifying child must meet the following tests:
- Relationship: The individual must be the child, stepchild, foster child, sibling, or a descendant of any of these.
- Age: The child must be under 19 at the end of the year or under 24 if a full-time student. (Ava, being 4 years old, meets this requirement.)
- Residency: The child must have lived with the taxpayer for more than half of the year. (Ava lives with Karl for the entire year.)
- Support: The child must not have provided more than half of their own support. (Ava has no income, so she meets this requirement.)
Conclusion for Ava: Ava is a qualifying child dependent.
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Qualifying Relative Test: In this case, we check Linda and Alicia:
- For Linda (fiancée): To be a qualifying relative, she must have a gross income of less than the exemption amount (which is typically $4,400 for 2023). Linda's gross income is $5,900, so she does not qualify.
- For Alicia (sister): To qualify as a dependent under the qualifying relative test, her gross income must also be less than the exemption amount. Alicia's gross income is $4,100, which is less than $4,400. Also, she must rely on Karl for more than half of her support, which is true given that she did not provide half of her support.
Conclusion for Alicia: Alicia is a qualifying relative dependent.
Given these evaluations:
- Ava (qualifying child): 1 dependent
- Alicia (qualifying relative): 1 dependent
Hence, Karl can claim two qualifying dependents on his return: Ava and Alicia.
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