Question

[The following information applies to the questions displayed below.] In 2020, Carson is claimed as a dependent on his parents' tax return. His parents report taxable income of $200,000 (married filing jointly). Carson's parents provided most of his support. What is Carson's tax liability for the year in each of the following alternative circumstances? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference. b. Carson is 23 years old at year-end. He is a full-time student and earned $14,300 from his summer internship and part-time job. He also received $5,300 of qualified dividend income. (Do not round intermediate calculations. Round your final answer to 1 decimal place.)

Answer 1

• Answer :

• As per internal revenue code person is dependent and under the age of 65 and his earned only income does not exceed$12,400 then he not required to file return
• Here, Carson is 23 years old and dependent on his parentsand earned from his summer job and part time job

• after school $14,300

• Which is above $12,000 so he has to file return of income
• Standard deduction greater of following

• ​​​​​​​( 1 ) $1,100

  ( 2 ) Earned income + $350 ( total cannot be more than standard deduction ) so here $12,400

• Earned income $14,300
• Unearned income $5,300
• Total income $19,600
• Standard Deduction $12,400
• Taxable income $7,200
• Unearned income $5,300
• Statutory Deduction 1,900
• Net Unearned income ( Kiddie tax rates ) $3,400
• Tax on Unearned income ( as per kiddie tax ) = ( 3,400 * 15% ) = $510
• Taxable income taxed at Carson's rate ( 7,200 - 3,400 ) = $3,800
• Preferential income taxed at Carson's tax rate $1,900
• Tax on preferential income ( 1,900 * 0% ) = 0
• Income taxable at Carson's Ordinary rate ( 3,800 - 1,900 ) = $1,900
• Tax on ordinary income ( 1900 * 10% ) = $190
• Total Tax ( $510 + $190 ) = $700

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