Question

Tony, age 15, is claimed as a dependent by his grandmother. During 2019, he had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800. Tony's taxable income is: a.$1,800. b.$1,800 – $1,100 = $700. c.$1,800 – $800 – $1,100 = ($100). d.$1,800 – $1,150 = $650. e.None of these choices are correct.

Answer 1

Answer: d.$1,800 – $1,150 = $650

Explanation:

In 2019, the IRS listed that a Dependent who is claimed by another tax payer ( Tony's Grandmother) can have a tax deduction of $1,100, or their earned income plus $350 depending on which is higher.

Tony's earned income is $800 from his part-time job so his deduction is $1,150 (800 + 350) as this is higher than $1,150.

His tax is therefore,

= Unearned Income + Earned Income - Deduction

= 1,000 + 800 - 1,150

= 1,800 - 1,150

= $650