Final answer:
Shonda's standard deduction for the tax year 2023 would be $1,150, as it is the greater of $1,150 or her earned income ($500) plus $400, but cannot exceed the standard deduction for a single taxpayer.
Step-by-step explanation:
For Shonda, a single taxpayer who is 68 years old and claimed as a dependent with earned income of $500 and interest income of $125, the standard deduction calculation for the tax year 2023 would typically involve understanding the IRS guidelines for dependents. As of my last update, the IRS stipulates that the standard deduction for a dependent is limited to the greater of $1,150 or the dependent's earned income plus $400, not to exceed the standard deduction for a single taxpayer which is higher in 2023 than previous years.
Since Shonda's earned income is $500, we will add the $400 to get $900, which is less than the minimum of $1,150. Hence, her standard deduction for 2023 would be $1,150. However, if there have been changes in tax regulations or if Shonda has specific conditions that apply, that could affect the actual deduction she is entitled to. It is important to consult the updated IRS guidelines or a tax professional for the most precise calculation.