[Anonymous]

Anna is a widow, 74 yrs old & blind, who is claimed as a dependent by her son. During 2009, she received $5200 social security benefit, $1500 bank interest, and $2000 in cash dividend from stock. Anna’s taxable income for 2009?

1. $400

2. $1150

3. $3800

4. $5200

5. None of above

Thanks for help in advance.

[Anonymous]

I think 1150 is correct. Her social security is not taxable because she makes under 25k. Then her 1500 bank interest and 2000 cash dividend would be taxable (3500 total), but then she also has a standard deduction. Since she is a dependent, her standard deduction would be $950 for 2010. Also, if a person is born before 1945 and/or blind, they receive an additional $1400 increase to their standard deduction, making her new standard deduction 2350. when you subtract 2350 from 3500, the resulting taxable income is 1150. I think its just an extra 1400 for born b4 1945 (age 65 or older) or for being blind, you dont receive 1400 + 1400 if you are 65+ and blind. so 1150 should be correct.

[Anonymous]

5. None of the above

Her AGI will be $3,500. Her standard deduction will be *$3,750 (she is blind, old and a dependent of someone else). That leaves no income left to be taxable.

*950+1400+1400=3750

[Anonymous]

Ok, then disregard my previous post as you do actually get 1400 for each of the 65 years or older and being blind, so the correct answer should be none of the above.

[Author]

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