Problem 331 LO 2 Determine the amount of the 2017 standard d

Problem 3-31 (LO. 2)

Determine the amount of the 2017 standard deduction allowed in the following independent situations. In each case, assume that the taxpayer is claimed as another person\'s dependent.

Amount of the Standard Deduction a. Curtis, age 18, reports income as follows: $700 interest from a certificate of deposit and $6,100 from repairing cars. $ b. Mattie, age 18, records income as follows: $600 cash dividends from a stock investment and $4,700 from handling a paper route. $ c. Mel, age 16, incurs income as follows: $675 interest on a bank savings account and $800 for painting a neighbor\'s fence. $ d. Lucy, age 15, reports income as follows: $400 cash dividends from a stock investment and $500 from grooming pets. $ e. Sarah, age 67 and a widow, incurs income as follows: $500 from a bank savings account and $3,200 from babysitting. $

Solution

Amount of the Standard Deduction Explanation a. Curtis, age 18, reports income as follows: $700 interest from a certificate of deposit and $6,100 from repairing cars. $6,350.00 The standard deduction for Curtis who can be claimed as a dependent by another taxpayer cannot exceed the greater of $1,050 or $350 + 6100, but limited to the $6,350 standard deduction for a single taxpayer. b. Mattie, age 18, records income as follows: $600 cash dividends from a stock investment and $4,700 from handling a paper route. $5,050.00 The standard deduction for Mattie who can be claimed as a dependent by another taxpayer cannot exceed the greater of $1,050 or $350 + 4700 = $5050 c. Mel, age 16, incurs income as follows: $675 interest on a bank savings account and $800 for painting a neighbor\'s fence. $1,150.00 The standard deduction for Mel who can be claimed as a dependent by another taxpayer cannot exceed the greater of $1,050 or $350 + $800 = $1150 d. Lucy, age 15, reports income as follows: $400 cash dividends from a stock investment and $500 from grooming pets. $1,050.00 The standard deduction for Lucy who can be claimed as a dependent by another taxpayer cannot exceed the greater of $1,050 or $350 + $500 = $850 e. Sarah, age 67 and a widow, incurs income as follows: $500 from a bank savings account and $3,200 from babysitting. $5,100.00 The standard deduction for Sarah who can be claimed as a dependent by another taxpayer cannot exceed the greater of $1,050 or $350 + $3200 = $3550 plus $1550 the additional standard deduction allowed as she is 67 older than 65.