How is a dependent's standard deduction calculated?

The calculation of a dependent's standard deduction is based on specific guidelines set by the IRS to ensure an equitable tax treatment. The correct method involves taking the greater of a specified base amount or their earned income plus a certain threshold.

In this case, the correct choice indicates that a dependent's standard deduction is equal to the greater of $950 or their earned income plus $300. This approach allows dependents who earn income to benefit from a larger deduction that reflects their ability to pay taxes. For 2023, if a dependent has earned income, the standard deduction provides a reasonable estimate of their living expenses.

The context of the other options can help clarify why they do not represent the accurate calculation. The statement that suggests the standard deduction is equal to just $950 does not take into account the possibility of earning income. Therefore, it does not adapt properly to dependents who may earn more than that threshold. Additionally, the suggestion that the deduction is based solely on the taxpayer's filing status overlooks the specific calculations for dependent situations, which are designed to be uniform, regardless of filing status.

Understanding this structure assists taxpayers in determining the right amount of deduction for dependents and ensures that dependents who have some form of income are not unduly taxed on