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. a. Carson is 17 years old at year-end and earned $14,000 from his summer job and part-time job after school. This was his only source of income. b. Carson is 23 years old at year-end. He is a full-time student and earned $14,000 from his summer internship and part-time job. He also received $5,000 of qualified dividend income. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

Part A

Description	Amount	Explanation
(1) Gross income/AGI	14000	14000 in wages. All earned income
(2) Standard deduction	(12200)	Greater of 1100 or (Earned income + 350) maximum up to 12200
(3) Taxable income	1800	(1) + (2)
Total tax	180	1800*10% = 180

Part B

Description	Amount	Explanation
(1)Gross income/AGI (All unearned income)	19000	$14000 is earned income and $5000 is unearned income from qualified dividends
(2) Minimum standard deduction	1100	Minimum for taxpayer claimed as dependent on another return
(3) $350 plus earned income	12200	350 + 14000 earned income (not to exceed $12200 regular standard deduction)
(4)Standard deduction for dependent on another tax return	12200	Greater of (2) and (3)
(5)Taxable income	6800	(1) – (4)
(6) Gross unearned income minus $2,200	2800	5000 − $2,200
(7)Net unearned income	2800	Lesser of (5) or (6)
(8) Parents’ preferential rate	15%
(9)Kiddie tax	420	(7) x (8)
(10)Taxable income taxed at Carson's tax rate	4000	(5) − (7)
(11) Preferential income taxed at Carson's tax rates	2200	5000 – (7)
(12) Carson's preferential rate	0%
(13) Tax on income using Carson's preferential rate	0	(11) × (12)
(14) Taxable income tax at Carson's ordinary tax rates	1800	(10) − (11)
(15) Tax on ordinary income	180	(14) × 10%
Total tax	$600	(9) + (13) + (15)