Sebastian (age 46) and Kaitlin (age 45) are married and file a joint tax return. Their 2017 adjusted gross income is $391,400 and includes $2,600 in investment income ($2,000 in short-term capital gains and $600 of interest income). They provided 100% of the support for their daughter, Olivia, age 26, who lives with them, and earned $4,700 from her part-time job. They also provided 100 percent of the support for Sebastian's mother, Emily, who is 67, blind, and lives in a nursing home. Emily received $4,000 in Social Security benefits and $450 of interest income. What is Sebastian and Kaitlin's deduction for personal and dependency exemptions for 2017 if the phaseout begins at $313,800?

Question

Quizplus · Accepted Answer

($391,400 - $313,800)/$2,500 = 31.04; .32 x 2 = 64%. $4,050 x 3 = $12,150 x .64 = $7,776; $12,150 - $7,776 = $4,374. No dependency exemption for daughter, age 26, who earned more than $4,000 income. Mother is dependent because social security income is not taxed.

Sebastian (Age 46) and Kaitlin (Age 45) Are Married and File