Question

Rebecca is a widow, age 69, who lives with her daughter and is her dependent. During 2019, her sources of income are interest income of 425 from her bank savings account and interest income of375 from tax-exempt municipal bonds. What is Rebecca's gross income, and must she file a tax return?

1) Gross income is $425, and she does not need to file a tax return.
2) Gross income is $425, and she needs to file a tax return.
3) Gross income is $800, and she needs to file a tax return.
4) Gross income is $375, and she needs to file a tax return.
5) Gross income is $375, and she does not need to file a tax return.

Answer 1

Rebecca's gross income is $425, which comes from interest income of her bank savings. Since the interest from tax-exempt bonds is not taxed, and her income is below the threshold, she does not need to file a tax return.

Step-by-step explanation:

Rebecca's gross income consists solely of her interest income because the interest from tax-exempt municipal bonds is not subject to federal income tax. Therefore, her gross income is $425, which is the interest from her bank savings account. As she only has one source of taxable income and it is below the requirement for filing a tax return, especially considering her age and dependent status, Rebecca does not need to file a tax return. Answering the student's question, the correct choice would be: Gross income is $425, and she does not need to file a tax return.