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 2019, 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 2019.
What will be an ideal response?
$23,000. 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 $24,400 and additional standard deductions of $1,300 each for being age 65 or older. Luther is a dependent (but this has no impact on their taxable income determination; it will provide a dependent tax credit). Thus, $23,000 [$50,000 – $24,400 – $2,600 (2×$1,300)].
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