Answer to Question #43368 in Economics of Enterprise for Seth Morgan
Homer (age 68) and his wife Jean (age 70) file a joint return. They furnish all of the support of Luther (Homer's 90-year-old father), who lives with them. For 2011, they received $6,000 of interest income on city of Chicago bonds and interest income on corporate bonds of $48,000. Compute Homer’s and Jean's taxable income for 2011.
Taxable income = adjusted income - (deductions + allowance for exemptions)
Interest income was $6,000. Interest from corporate bonds was $48,000. Adjusted income = 6,000 + 48,000 = 54,000. In 2011 standard deduction was $11,600 for married filing jointly. Additional standard deduction in 2011 based on age (65 or older) was $1,150 for married filing jointly per person, $2,300 for Homer and Jean. For father the additional standard deduction will be $1,450 as for single. Total amount will be $3,750. TI = 54,000 - (11,600 + 3,750) = 38,650.
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