Question

In: Accounting

Taylor, age 18, is a dependent of her parents. In the current year, she has the following income: $4,000 wages from a summer job

Taylor, age 18, is a dependent of her parents. In the current year, she has the following income: $4,000 wages from a summer job, $1,800 interest from a money market account, and $2,000 interest from City of Boston bonds.

a. What is Taylor’s taxable income for the year?

b. What is Taylor’s Federal income tax liability for the year?

Solutions

Expert Solution

a)

Wages 4000
Interest from money market 1800
Interest from city of boston bonds exempt from tax
Total income 5800
less:standard deduction -4350 **
personal exemption 0**
Taxable 1450

 

**standard deduction is equal to 1050 or (earned income 4000+ 350 = 4350) whichever is greater

**personal exemption is not available if you claiming as dependent.

 

b)

Taylor Tax rate : 10% since her parents file joint return and her income fall under this category.

standard deduction is equal to 1050 or (earned income 4000+ 350 = 4350) whichever is greater

Junaid answered 2 years ago
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