Question

In: Accounting

Compute the 2019 standard deduction for the following taxpayers.

Compute the 2019 standard deduction for the following taxpayers.

a. Ellie is 15 and claimed as a dependent by her parents. She reports $800 in dividends income and $1,400 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 $10,000.

c. Shonda is age 68 and single. She is claimed by her daughter as a dependent. Her earned income is $500, and her interest income is $125.

d. Frazier, age 55, is married but is filing a separate return. His wife Emma itemizes her deductions.

Solutions

Expert Solution

a.

$1,750. When filing her own tax return, Ellie is limited to the greater of $1,100 or $1,750 (the sum of the earned income for the year plus $350).

b.

$27,000. A taxpayer who is age 65 or over or blind in 2019 qualifies for an additional standard deduction of $1,300 or $1,650, depending on filing status. Ruby and Woody’s standard deduction is $24,400 (married filing jointly) plus the additional $1,300 for Ruby being age 65 or older and another $1,300 for Woody’s being age 65 or older.

c.

$2,750. When filing her own tax return, Shonda is limited to the greater of $1,100 or $850 (the sum of the $500 of earned income for the year plus $350). This limitation applies only to the “basic” standard deduction. A dependent who is 65 or older or blind is also allowed the additional standard deduction amount on his or her own return. Therefore, Shonda’s standard deduction is $2,750 ($1,100 + $1,650).

d.

$0. Frazier is ineligible to use the standard deduction and therefore must itemize because he is married filing a separate return when his spouse itemizes deductions.


a. $1,750

b. $27,000

c. $2,750

d. $0

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