During 2020, Montoya (age 15)received $2,200 from a corporate bond. He also received $600 from a savings account established for him by his parents. Montoya lives with his parents and he is their dependent. What is Montoya's taxable income?

Question

Quizplus · Accepted Answer

Montoya's taxable income will be calculated by adding his unearned income (interest income) to his standard deduction. In 2020, the standard deduction for a dependent child is $1,100.

Montoya received $2,200 from a corporate bond and $600 from a savings account.

Therefore, Montoya's taxable income is $2,800 ($2,200 + $600 - $1,100 standard deduction). The correct answer is (C).

Option A is incorrect because Montoya has unearned income that is subject to taxation.

Option B is incorrect because it only includes Montoya's income from the corporate bond and does not factor in his income from the savings account or his standard deduction.

Option D is correct and includes all relevant information regarding Montoya's income and tax liability.

During 2020, Montoya (Age 15)received $2,200 from a Corporate Bond