Montague (age 15)is claimed as a dependent by his parents, Matt and Mary.In 2019, Montague received $5,000 of qualified dividends, and he received $800 from a part-time job.What is his taxable income for 2019?

Question

Quizplus · Accepted Answer

Montague's taxable income is calculated as follows:
- $5,000 of qualified dividends are taxed at the capital gains tax rate of 0% for taxpayers in the 0- $38,600 income bracket. Therefore, this portion of his income is not taxable.
- $800 of earned income is subject to federal income tax. However, Montague can claim the standard deduction of $1,100 for a dependent, which brings his taxable income to $800 - $1,100 = -$300.
Since his taxable income is negative, Montague won't owe any federal income tax.

Montague (Age 15)is Claimed as a Dependent by His Parents