Question

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In 2020, Sean 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 Seans  tax liability for the year in each of the following alternative circumstances? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference.

a. Sean is 17 years old at year-end and earned $15,100 from his summer job and part-time job after school. This was his only source of income.

What is Tax Liability?________

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[The following information applies to the questions displayed below.]

In 2020, Sean 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 Seans tax liability for the year in each of the following alternative circumstances? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference.

Sean, is 23 years old at year-end. He is a full-time student and earned $15,100 from his summer internship and part-time job. He also received $6,100 of qualified dividend income. (Do not round intermediate calculations. Round your final answer to 1 decimal place.)

Tax Liability?_______

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[The following information applies to the questions displayed below.]

In 2020, Mike is claimed as a dependent on her parents' tax return. Her parents report taxable income of $500,000 (married filing jointly). Mike did not provide more than half her own support.

What is Mikes tax liability for the year in each of the following alternative circumstances? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates, for reference. (Leave no answer blank. Enter zero if applicable.)

He received $5,800 of interest income from corporate bonds she received several years ago. This is her only source of income. He is 20 years old at year-end and is a full-time student.

Tax Liability?______

Answer 1

Hi

Solution: Both are individual qestions, as per policy first is answered: Answer is highlighted in yellow: As per Tax year 2020 rules, answer may be different for different year: a) Sean has no unearned income, No kiddle tax rates will be applicable on her income: Earned Income Standard deduction Greater of 1100 or (earned income +350) Taxable income $ 15,100 $ -12,400 Limited to $12,400 limit $ 2,700 Tax Liability (2700*10%) $ 270

b) Sean has more than $2100 unearned income, kiddle tax rates will be applicable on her income: Earned Income Qualified Dividends (Unearned) AGI Standard deduction Greater or 1100 or (earned income +350) Taxable Income $ 15,100 $ 6,100 $ 21,200 $ -12,400 $ 8,800 Unearned Income Statutory Deduction - subjec to ordinary rates Net Unearned Income, subject to kiddle tax rates $ 6,100 $ 2,100 $ 4,000 Tax on Unearned income per Kiddie tax - Preferential rate -15% $ 203 (4000-2650) *15% $ $ $ 4,800 2,100 Taxable income taxed at Carson's rate (8800-4000) 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 (4800-2100) Tax on ordinary income (2700*10%) Tax Liability (203+0+270) $ $ $ 2,700 270 472.5