Volunteer Income Tax Assistance (VITA) Certification Practice Test

In the scenario where Wendy Gordon earns $6,500 in wages, why must she claim 0 exemptions?

1. Her income exceeds $10,000

2. Her parents can claim her as a dependent

3. She is not a U.S. citizen

4. She has no taxable income

The correct answer is: Her parents can claim her as a dependent

In the context of tax exemptions, Wendy Gordon must claim 0 exemptions because her parents can claim her as a dependent. When an individual is eligible to be claimed as a dependent on someone else's tax return, they are generally required to claim 0 exemptions for themselves. This is because the dependent status shifts the tax benefits to the person who claims the dependent, in this case, Wendy's parents. Being a dependent impacts the taxpayer's ability to claim personal exemptions, which are designed to reduce taxable income. If Wendy were to claim exemptions while her parents also claimed her, it could result in double benefits, which is not permissible under tax law. Thus, her earning of $6,500 does not exempt her from this requirement, as she is still subject to the dependency guidelines. The other choices do not directly address the requirement to claim exemptions effectively: - The notion of her income exceeding $10,000 is irrelevant to the exemption claim as it does not determine dependent status. - Being a non-U.S. citizen does not automatically disqualify someone from claiming exemptions, which makes that option inapplicable. - Having no taxable income would indicate that no tax may be owed, but it does not affect the requirement regarding the exemptions related to her dependent