Question

Hunter (age 68) and his wife Jenelle (age 70) file a joint return. They furnish all...

  1. Hunter (age 68) and his wife Jenelle (age 70) file a joint return. They furnish all of the support of Luther (Hunter's 90-year old father) who lives with them. In 2020, the couple received $ 6,000 of interest income on City of Chicago bonds and interest and dividend income on corporate stocks and bonds of$ 50,000.

Compute Hunter and Jenelle's taxable income for 2020.

Please note this is for 2020 and not 2019.

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Answer #1

In 2020 Standard Deduction for joint filing was $24,800.

as per the question Their gross income is $50,000 since the $6,000 interest on municipal bonds is an exclusion. They are entitled to a basic standard deduction of $24,800 and additional standard deductions of $1,300 each for being age 65 or older. and as there was no income for Luther and as he is a dependent there will be no impact on there taxable income, it can only provide dependent tax cerdit. Thus, The Taxable income is as under

$50,000 – $24,800 – $2,600 (2×$1,300) = $22,600.

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