Eugene and Velma are married. For 2016, Eugene earned $25,000 and Velma earned $30,000. They have decided to file separate returns and are each entitled to claim one personal exemption. They have no deductions for adjusted gross income. Eugene's itemized deductions are $11,200 so he is going to itemize. Velma's itemized deductions are $4,000. Assuming Eugene and Velma do not live in a community property state, what is Velma's taxable income?

Question

Quizplus · Accepted Answer

Since Eugene is itemizing, Velma cannot use the standard deduction if she is filing separately. Therefore, her taxable income will be calculated as follows:

Velma's AGI = $30,000
Minus personal exemption = $4,050 (one personal exemption for each spouse)
Minus itemized deductions = $4,000
Velma's taxable income = $21,950
Therefore, the correct answer is (C) $21,950.

Eugene and Velma Are Married