During the 2012, taxpayer C (age 17 on the last day of the taxable year and a dependent on his widowed mother's tax return) receives $350 of interest on a savings account and $900 earned income from baby-sitting.Based on these facts, which one of the following statements is correct?

Question

Quizplus · Accepted Answer

For a dependent minor with both earned and unearned income, the standard deduction for unearned income is $1,100 (as of the tax year in question, though this amount can change with tax law updates). Taxpayer C has $350 of unearned income (interest) and $900 of earned income (baby-sitting), totaling $1,250 in income. The standard deduction for earned income is the earned income amount plus $350, but not more than the standard deduction for an individual, which is $12,550 for 2021 (this amount changes annually). However, since C's total income does not exceed the sum of $1,100 plus earned income, only the unearned income above $1,100 is taxable. Since C's unearned income is $350, which is less than $1,100, C technically has no taxable unearned income. However, considering the specific options provided and the rules for dependents' filing requirements, the closest correct option based on the information given and typical tax rules would be that C has some taxable income due to the specific amounts and types of income received, but the explanation provided in the choices does not accurately reflect standard tax calculations for dependents. Therefore, the explanation here corrects the misunderstanding: C should not have taxable income based on the standard deduction rules for dependents, but given the options, A seems to imply C has some taxable income, which aligns with misunderstanding the standard deduction application. However, this explanation clarifies that based on standard tax rules, C's income should not be taxable, indicating a need for correction in the provided choices.

During the 2012, Taxpayer C (Age 17 on the Last