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R and J were married in 2007. They have a five year old child and a...

R and J were married in 2007. They have a five year old child and a son born December 16, 2018. R's 67 year old father lived in a nursing home until his death on March 4, 2018. R and J provided all of his support until his death. R earned $43,000 in salary during the year. They also had $2,100 in interest from the credit union. They incurred $7,800 in itemized deductions during the year. Compute their taxable income and their tax for 2018.

I am assuming they are filing Married Filing Jointly
R's Father died but can be claimed as additional dependent
Both children can be claimed as dependent children (even the newborn)

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Answer #1

Though R's father and both children can be claimed as qualifying dependents, there is no personal and dependency exemption in 2018.

So, their taxable income will be calculated as follows:

AGI 45100 ($43000 salary + $2100 interest from the credit union)
Less: greater of standard deduction or itemized deduction 24000 (standard deduction for married filing jointly in 2018)
Taxable income 21100
tax liability 2151 (1905+(12%*(21100-19050)) (using tax rates - 2018 for married filing jointly)

Dear Student,

If any doubts further, feel free to ask

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