Question

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?

2019 Tax Rate Schedules

Individuals

Schedule X-Single

If taxable income is over:	But not over:	The tax is:
$           0	$    9,700	10% of taxable income
$    9,700	$ 39,475	$970 plus 12% of the excess over $9,700
$ 39,475	$ 84,200	$4,543 plus 22% of the excess over $39,475
$ 84,200	$160,725	$14,382.50 plus 24% of the excess over $84,200
$160,725	$204,100	$32,748.50 plus 32% of the excess over $160,725
$204,100	$510,300	$46,628.50 plus 35% of the excess over $204,100
$510,300	—	$153,798.50 plus 37% of the excess over $510,300

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)

If taxable income is over:	But not over:	The tax is:
$           0	$ 19,400	10% of taxable income
$ 19,400	$ 78,950	$1,940 plus 12% of the excess over $19,400
$ 78,950	$168,400	$9,086 plus 22% of the excess over $78,950
$168,400	$321,450	$28,765 plus 24% of the excess over $168,400
$321,450	$408,200	$65,497 plus 32% of the excess over $321,450
$408,200	$612,350	$93,257 plus 35% of the excess over $408,200
$612,350	—	$164,709.50 plus 37% of the excess over $612,350

Schedule Z-Head of Household

If taxable income is over:	But not over:	The tax is:
$           0	$ 13,850	10% of taxable income
$ 13,850	$ 52,850	$1,385 plus 12% of the excess over $13,850
$ 52,850	$ 84,200	$6,065 plus 22% of the excess over $52,850
$ 84,200	$160,700	$12,962 plus 24% of the excess over $84,200
$160,700	$204,100	$31,322 plus 32% of the excess over $160,700
$204,100	$510,300	$45,210 plus 35% of the excess over $204,100
$510,300	—	$152,380 plus 37% of the excess over $510,300

Schedule Y-2-Married Filing Separately

If taxable income is over:	But not over:	The tax is:
$           0	$    9,700	10% of taxable income
$    9,700	$ 39,475	$970 plus 12% of the excess over $9,700
$ 39,475	$ 84,200	$4,543 plus 22% of the excess over $39,475
$ 84,200	$160,725	$14,382.50 plus 24% of the excess over $84,200
$160,725	$204,100	$32,748.50 plus 32% of the excess over $160,725
$204,100	$306,175	$46,628.50 plus 35% of the excess over $204,100
$306,175	—	$82,354.75 plus 37% of the excess over $306,175

Tax Rates for Net Capital Gains and Qualified Dividends

Rate*	Taxable Income
	Married Filing Jointly	Married Filing Separately	Single	Head of Household	Trusts and Estates
0%	$0 - $78,750	$0 - $39,375	$0 - $39,375	$0 - $52,750	$0 - $2,650
15%	$78,751 - $488,850	$39,376 - $244,425	$39,376 - $434,550	$52,751 - $461,700	$2,651 - $12,950
20%	$488,851+	$244,426+	$434,551+	$461,701+	$12,951+

Estates and Trusts

If taxable income is over:	But not over:	The tax is:
$ 0	$ 2,600	10% of taxable income
$ 2,600	$ 9,300	$260 plus 24% of the excess over $2,600
$ 9,300	$12,750	$1,868 plus 35% of the excess over $9,300
$12,750		$3,075.50 plus 37% of the excess over $12,750

A) Carson is 17 years old at year-end and earned $14,825 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 $14,825 from his summer internship and part-time job. He also received $6,110 of qualified dividend income.

Answer 1

A).

• As per Internal revenue code person is dependent and under the age of 65 and his earned only income does not exceed $12000 then he not required to file return.
• Here carson is 17 year old and dependent on his parents and earned from his summer job and part time job after school $14,825 which is above $12000 so he has to file return of income.
• Standard deduction greater of following

(1) $1050

(2) Earned income + $350 (but the total can't be more than basic standard deduction)

So here $12000

So $12000 is higher available as a deduction.

So $14,825 - $12,200 = $2,625

Tax = $2,625 * 10% = $262.5

.

B).

Answer -

Step - ( 1 ) - Information Given -

• In 2019, Carson is claimed as a dependent on his parents' tax return.
• Carson is 23 years old at year-end.
• He is a full time student and earned $14,825 from his summer internship and part- time job.
• He also received $6,110 of qualified dividend income.

.

Step - ( 2 ) - Calculation of Carson's Adjusted Gross Income and Taxable Income -  

Tax filing status - Single

Particulars	Remarks / Calculations	Amount in ( $ )
Income from summer internship and part- time job	Given in question	14,825
Add - Qualified dividend income	Given in question	6,110
Adjusted Gross Income		20,935
Less - Standard Deduction ( as per federal income tax rules )		(12,200)
Total Taxable Income		8,735

.

Step - ( 3 ) - Calculation of Carson's Tax liability on Ordinary taxable income -

Ordinary taxable income = Total Taxable Income - Qualified dividend income

= $8,735 - $6,110

= $2,625

Tax rate	Taxable income	Calculations	Amount in ( $ )
10%	$0 - $9,700	$2,625 * 10%	262.5
Carson's Tax liability			262.5

Note -

As per Federal income tax rules, the tax rate on qualified dividends for investors that have ordinary income taxed at 10% or 12% is 0%.

So, Qualified dividend income of $6,110 is not taxable, because Carson's ordinary taxable income is taxed at 10%.

Therefore, Carson's Total Tax liability = $262.5 [ refer step - (3) ].