Cathy Card maintains a household in which she, her daughter (Lily), and her widowed mother-in-law (Joan) live. Since 2013, she also has provided more than half of their support. Cathy’s husband, Greg, left for parts unknown in April 2013 and, except for one postcard, has not been heard from since. In the postcard (no return address included) that Cathy received in March 2014, Greg announced that he planned to claim both Lily and Joan as dependents on his own tax return.
Lily (age 19 in December 2013) graduated from high school on May 3, 2013, and plans to start college in 2015. Until then, she is working as much as possible to save for college expenses. She earned $8,200 in 2013 and $16,500 in 2014. Joan’s income is negligible and originates from nontaxable sources (social security benefits, tax-exempt bond interest, etc).
For tax year 2013, Cathy filed her Federal income tax return as married filing separately and claimed no exemptions for dependents. She has not yet filed for 2014. She is confused by her situation and has come to you for advice in early January of 2015.
Complete the following as a group and submit one answer in a Word document on Canvas. Groups may also collaborate within Google Docs and submit a link to the final documents within Canvas:
1) Prepare a memo for your firm’s client files that addresses Cathy’s issue(s) for all years involved.
2) Write a letter to Cathy addressing her concerns. Her address is 141 Mockingbird Lane, Maple Heights, MI 48520