Emil and Judy are married and file a joint return. They have no children. Emil i

Question

Emil and Judy are married and file a joint return. They have no children. Emil is 68 and Judy is 60. They contribute over half the support of Judy’s mother Cora, age 85, who earned $800 from babysitting jobs and $1,900 from social security benefits during 2016. Cora lives alone in her own apartment. Emil earned a salary of $60,000 in 2016 from his job at Karma Corp. where he is covered by his company’s pension plan. Judy, worked part-time in 2016 with $1,000 salary and is not covered by her employer’s pension plan. Other items received jointly in 2016 were as follows:

            Life insurance proceeds refund             $100.

            Interest on life insurance policy’s accumulated dividends                      $300

            Dividends on a stock of a Swiss Corporation                $500

            Dividends on life insurance policy                    $200

Determine Emil and July’s taxable income and tax liability.

Explanation / Answer

Emil and Judy joint Tax treturn Emil Income from salary        60,000 Judy Income from salary           1,000 Cora income           2,700 Interest on life insurance policy’s accumulated dividends                                   300 Dividends on a stock of a Swiss Corporation                             500 AGI        64,500 Less : Standard deduction        12,600 Net income        51,900 Tax liability 10%(0-18550)           1,855 15%(18550-75300)           5,003 Total tax           6,858

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