Wilma, Age 70 and Single, Is Claimed as a Dependent

question 91

Multiple Choice

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return.During 2012, she had interest income of $2,400 and $800 of earned income from baby sitting.Wilma's taxable income is:

• A)$700.
• B)$850.
• C)$1,800.
• D)$2,250.
• E)None of the above.

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Definitions:

Compounded Quarterly

Calculation of interest done four times a year, where the interest is added to the principal and each subsequent interest computation is based on the new principal amount.

Compounded Annually

Pertaining to an interest calculation method where interest is added to the principal at the end of each year, and future interest is calculated on the total.

Compounded Annually

An interest calculation method where interest is added to the principal sum once a year, allowing it to earn interest in the subsequent year.

Annuity

A finance tool that disburses a predetermined series of payments, typically to support individuals financially during retirement.