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? 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 $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

Carson's Computation of income for the year 2019

Particulars	Amount ($)
Gross income	= 14,000 +5,000 = 19,000
Less: standard deduction	12,000
Taxable income	7,000
Gross unearned income	= 5,000 - 2600 = 2,400
Kiddie tax (A)	= 2,400 X 0.15 = 360
Taxable income taxed at Carson rate	= 7,000 - 5,000 = 2,000
Ordinary tax (B)	= 2,000 X 0.10 = 200
Total tax liability (A + B)	560

Carson's Tax liablity in alternative b is $560 for the year 2019.