During 2020, Montoya (age 15)received $2,240 from a corporate bond. He also received $640 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 is calculated by subtracting the standard deduction for dependents from his total unearned income. In 2020, the standard deduction for dependents is the greater of $1,100 or earned income plus $350, but not more than $12,400. Since Montoya has no earned income, the standard deduction is $1,100. His total unearned income is $2,240 + $640 = $2,880. Therefore, his taxable income is $2,880 - $1,100 = $1,780.

During 2020, Montoya (Age 15)received $2,240 from a Corporate Bond