Question

Fred and Anna are married and file a joint return for 2018. Fred is over age 65 and Anna is legally blind. They have AGI for the year of $50,000. They also have mortgage interest of $13,000, charitable contributions of $1,500 and real property taxes on their home of $11,000. What is their taxable income for 2018?a. $24,500b. $23,400C. $25,500d. $26,000e. None of the above

Answer 1

Option "B" is the correct answer to the following statement.

Explanation:

Given:

Total Adjusted Gross Income of Fred and Anna = $50,000.

In this situation, Fred and Anna should either choose a standard deduction or a comprehensive deduction.

Amount of Standard Deduction

Married File a joint return = $24,000

If an applicant is jointly taxing coupled and partner is over 65 years of age, they may raise the deduction by $1,300.

If an applicant is jointly taxing coupled and one partner is blind, they may Also raise the deduction by $1,300.

So, Total standard deduction = $24,000 + $1,300 + $1,300 = $26,600

Amount of Comprehensive Deduction

Given:

Interest = $13,000

Charitable contribution = $1,500

Property Deduction = $11,000 (Maximum of $10,000 is allowed) = $10,000

Total deduction = $13,000 + $1,500 + $10,000 = $24,500

So , Fred and Anna choose Standard Deduction

Total taxable income = $50,000 - $26,600 = $23,400