7. Silvia is 67 years old. Last year was a very hard year for Silvia. Her husban

Question

7. Silvia is 67 years old. Last year was a very hard year for Silvia. Her husband, John, of 42 years died and her youngest daughter joined the military and left her son, Carlos (age 5) with Silvia shortly after John's death. This year Carlos have been living with Silvia all year. Silvia received She and John had purchased the annuity several years ago for $125,000. The annuity pay:s 10,000 per year for 20 years, or until both spouses have passed away, whichever occurs first. Silvia received $2,000 of municipal bond interest during the year. She municipal bond has a current yield of 2.5%. Silvia could buy taxable bonds with a yield of 3.2%. Silvia withdrew 10,000 from a Health Savings Account for medical expenses. She also withdrew $10,000 from a Traditional IRA. Using 2018 tax law, what is Silvia's: a. Filing status? (3 pts) b. Number of dependents (2 pts) c. Total gross income reported on the tax return EXCLUDING Social Security Benefits (8 pts) Taxable amount of Social Security Benefits (4 pts) Standard deduction amount (2 pts) d. e.

Explanation / Answer

1. As Silvia's husband died the current tax year and she has a dependent grandchild she needs to file it as Qualified widoe with a dependent child.

2. Silvia can show her grandchild Carlos as her dependent as she has been taking care of the child all the year.

3. Calculation of total gross income excluding social security benefit.

4. There ia a limit of $25,000 if the filer is a qualifying widow with a dependent child.

Silvia receives $20,000 as Security benefits 50%of it would be %10,000, her combined income is $(10000+10,000) i.e. $20,000 , which is less than the limit. Hence, she need not pay any tax on Social security benefits.

Particulars Amount($) Explanation Annuity payment received 0 the annuity is qualified as it provides retiremnt benefit. Municipal bond interest recieved 0 Federal tax exemption Withdrawl from HSA 0 Withdrawl is made for health reasons. Withdrawl from traditional IRA 10,000 taxable Gross taxable amount 10,000

Related Questions

Navigate

• Browse (All)
• Browse 7
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.