Question

Henry, age 70 and single, is claimed as a dependent on his daughter's tax return. During 2019, he had interest income of $4,000 and $800 of earned income from consulting. Henry's taxable income is:

a.$2,100.
b.$1,300.
c.$1,400.
d.$1,200.
e.$0.

Answer 1

Henry's taxable income is determined by subtracting the proper standard deduction and any exemption amount from his adjusted gross income which is the total of his interest and earned income.

Without specific deduction and exemption amounts, a definite answer can't be provided.

Step-by-step explanation:

The question asks about Henry's taxable income considering the interest and earned income he received. The taxable income for a dependent single individual is calculated by taking the adjusted gross income and subtracting both the standard deduction and the exemption.

For Henry, his adjusted gross income would be his interest income of $4,000 plus his earned income of $800 from consulting, which totals to $4,800.

As of 2019, the standard deduction for a dependent is typically lesser than for a non-dependent. Given that Henry is over 65, he may also qualify for an additional standard deduction amount if this was not already accounted for in his daughter’s tax return.

Since we were not provided with the specific deduction and exemption amounts for Henry, a clear answer cannot be given without more information.

In a typical scenario, a single dependent over 65 with simple income might have a standard deduction of $1,300 or $1,650 (for 2019) and possibly an additional standard deduction amount; these would be subtracted from the adjusted gross income to determine his taxable income.