Question

Star and Bucks are married. Star is 66 years old and Bucks is 62 years old. They have adjusted gross income of $100,000 and itemized deductions of $17,500. In 2020, Star and Bucks will have taxable income of

A) $67,600.            

B) $73,900

C) $82,500.             

D) $100,000.

Please show work, thank you!

Answer 1

Answer:

Correct answer is:

B) $73,900

Explanation:

Star is 66 years old and Bucks is 62 years old

For 2020 Tax year, standard deduction for married file jointly is $24,800 and it goes up by $1,300 if one of spouse is 65 or older.

Hence standard deduction for Star and Bucks would be ($24,800 + 1300=) $26,100. The standard deduction is higher than itemized deductions of $17,500.

Star and Bucks will have taxable income = AGI - standard deduction

= $100,000 - 26,100

= $73,900

As such option B is correct and other options A, C, and D are incorrect.