Question

Compute the 2019 standard deduction for the following taxpayers.

a. Ellie is 15 and claimed as a dependent by her parents. She reports $1,700 in dividends income and $1,880 in wages from a part-time job. $

b. Ruby and Woody are married and file a joint tax return. Ruby is age 66, and Woody is 69. Their taxable retirement income is $12,170. $

c. Shonda is age 68 and single. She is claimed by her daughter as a dependent. Her earned income is $150, and her interest income is $425. $

d. Frazier, age 58, is married but is filing a separate return. His wife Emma itemizes her deductions.

Answer 1

Answer :

a. As per federal income tax Act, taxpayers who are dependent on another can claim maximum Standard deduction of higher of i. $1,100 or

ii. $350 +Earned Income of the taxpayers.

but that amount can not exceed the regular standard deduction amount of taxpayers.

Therefore, Ellie can claim the standard deduction of higher of two:

i.$1,100 or

ii.$350 + $1700 + $1880= $3,930

The standard deduction amount is $3,930.

b. As per federal income tax Act, the standard deduction amount of married taxpayers is $24,400. However, if both taxpayers who file return jointly have age above 65 then both will get an additional deduction of $1,300 each. Therefore, the amount of standard deduction for Ruby and Wood would be $24,400 + $2,600 = $27,000.

c. As per federal income tax Act, taxpayers who are dependent on another can claim maximum Standard deduction of higher of i. $1,100 or

ii. $350 +Earned Income of the taxpayers.

but that amount can not exceed the regular standard deduction amount of taxpayers.

Therefore, Shonda can claim the amount of standard deduction which should be higher of two as:

i.$1,100 or

ii.$350 + $150 + $425 = $925

The standard deduction amount is $1,100.

d. As per federal income tax Act, the taxpayer can opt either itemized duction or standard deduction but not both. The Act further states that if married couple file return jointly and either of the spouse has used itemized deduction then other spouse cannot claim the standard deduction.

In the given case, Frazier is married but file a separate return and therefore he can claim the standard deduction even if his wife has claimed his itemized deduction.

The amount of standard deduction is $12,200.