Question

Wilma, age 60 and single, is claimed as a dependent on her daughter's tax return. During 2016, she had interest income of $2,700 and $600 of earned income from babysitting. Wilma's taxable income is:

A.$700
B.$900
C.$2,250
D.$1,750
E.None of these choices are correct.

Answer 1

Wilma's taxable income is $2,250.

Step-by-step explanation:

To determine Wilma's taxable income, we need to consider both her interest income and earned income. The first step is to add her interest income of $2,700 to her earned income of $600, which gives us a total income of $3,300. However, since Wilma is claimed as a dependent on her daughter's tax return, the standard deduction for her filing status is $1,050.

Therefore, her taxable income is the total income minus the standard deduction, which is $3,300 - $1,050 = $2,250.