In 2017, Carson is claimed as a dependent on his parent\'s tax return. His paren
ID: 2559120 • Letter: I
Question
In 2017, Carson is claimed as a dependent on his parent's tax return. His parents' ordinary income marginal tax rate is 28 percent. 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 for reference.
a. Carson is 17 years old at year-end and earned $12,000 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 $12,000 from his summer internship and part-time job. He also received $5,000 of qualified dividend income.
Explanation / Answer
Solution:-
a.
Carson’s tax liability is $565. Note that Carson has no unearned income and is not subject to the kiddie tax.
b.
Carson’s tax liability is $1,030. Carson is subject to the kiddie tax because he is a full-time student under age 24 and has unearned income greater than $2,100.
Please Rate or comment if you have any doubt regarding this solution.
Description Amount Explanation (1) Gross income / AGI 12,000 12,000 in wagesAll earned income (2) Standard Deduction (6,350) Not subject to kiddie tax limitations—no unearned income (3) Personal exemption 0 Claimed as dependent on parents’ return (4) Taxable income 5,650 (1) + (2) + (3) Total tax 565 5,650 * 10%Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.