Montague (age 15)is claimed as a dependent by his parents Matt and Mary.In 2017,Montague received $5,000 of qualified dividends and he received $800 from a part time job.What is his taxable income for 2017?

Question

Quizplus · Accepted Answer

As a dependent, Montague's standard deduction for 2017 is $1,050. 
His taxable income is calculated as follows: 
$5,000 (Qualified dividends) 
+ $800 (Part-time job income) 
- $1,050 (Standard deduction) 
= $4,750 
However, the first $1,050 of unearned income (such as qualified dividends) is tax-free for dependents, which means that Montague's taxable income is reduced by $1,050. 
$4,750 (Total taxable income) 
- $1,050 (Tax-free threshold for unearned income) 
= $3,700 
Therefore, Montague's taxable income for 2017 is $4,650.

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