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. 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. (find Tax liability)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.(Find Tax Liability)

Answer 1

The tax laibility as calculated is $1036.

Explanation:

a.)  Carson earnings  $14000

Less: the Standard deduction  $12000

Taxable income  $2000  

Tax liability  $200

b.)  Carson earnings  $14000

Qualified dividend income  $5000

Gross income  $19000

less: Standard deduction  $12000

Taxable income  $7000

Taxable income taxed at carson rate  $2000

($7000 minus $5000)  

           Ordinary Tax  $200

Kiddie Tax is calculated as follows:  

Gross unearned income  

unearned income                             $5000

Kiddie tax up to 2600                          $260

Kiddie tax for over and above 2600  $576

                                                                     $836  

Total tax liability ($200 plus $836)           $1036