Question

Required information The following information applies to the questions displayed below. In 2019, Carson is claimed as a dependent on his parents' tax return. 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. Estates and Trusts for reference b. Carson is 23 years old at year-end. He is a full-time student and earned $15,275 from his summer internship and part-time job. He also received $5,980 of qualified dividend income. (Do not round intermediate calculations. Round your final answer to 1 decimal place.) Tax baby

Answer 1

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Solution: Answer is highlighted in yellow: As per Tax year 2019 rules, answer may be different for different year: Carson has more than $2200 unearned income, kiddle tax rates will be applicable on her income: b) Cars Earned Income Qualified Dividends (Unearned) AGI Standard deduction Greater or 1100 or (earned income +350) Taxable income $ $ $ $ $ 15,275 5,980 21,255 -12,200 9,055 Unearned Income Statutory Deduction - subjec to ordinary rates Net Unearned Income, subject to kiddle tax rates $ $ $ 5,980 2,200 3,780 Tax on Unearned income per Kiddie tax - Preferential rate -15% $ 170 (3780-2650) *15% $ $ $ 5,275 2,200 . Taxable income taxed at Carson's rate (9055-3780) Preferential income taxed at Carson's tax rates Tax on preferential income (2100*0%) Carson's tax rate would be 10 percent if it were ordinary income, hence, he qualifies for 0 percent rate on dividends). Taxable income tax at Carson's ordinary tax rates (5275-2200) Tax on ordinary income (3075*10%) Tax Liability (170+0+308) $ $ $ 3,075 or (9055-5980) 308 477