Question

In 2020, Sheryl is claimed as a dependent on her parents' tax return. Her parents report taxable income of $500,000 (married filing jointly). Sheryl did not provide more than half her own support.

What is Sheryl's tax liability for the year in each of the following alternative circumstances? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates, for reference. (Leave no answer blank. Enter zero if applicable.)

b. She received $6,000 of interest income from corporate bonds she received several years ago. This is her only source of income. She is 16 years old at year-end.

TAX LIABILITY =

2020 Tax Rate Schedules

Individuals

Schedule X-Single

If taxable income is over:	But not over:	The tax is:
$          0	$    9,875	10% of taxable income
$    9,875	$ 40,125	$987.50 plus 12% of the excess over $9,875
$ 40,125	$ 85,525	$4,617.50 plus 22% of the excess over $40,125
$ 85,525	$163,300	$14,605.50 plus 24% of the excess over $85,525
$163,300	$207,350	$33,271.50 plus 32% of the excess over $163,300
$207,350	$518,400	$47,367.50 plus 35% of the excess over $207,350
$518,400	—	$156,235 plus 37% of the excess over $518,400

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)

If taxable income is over:	But not over:	The tax is:
$          0	$ 19,750	10% of taxable income
$ 19,750	$ 80,250	$1,975 plus 12% of the excess over $19,750
$ 80,250	$171,050	$9,235 plus 22% of the excess over $80,250
$171,050	$326,600	$29,211 plus 24% of the excess over $171,050
$326,600	$414,700	$66,543 plus 32% of the excess over $326,600
$414,700	$622,050	$94,735 plus 35% of the excess over $414,700
$622,050	—	$167,307.50 plus 37% of the excess over $622,050

Schedule Z-Head of Household

If taxable income is over:	But not over:	The tax is:
$          0	$ 14,100	10% of taxable income
$ 14,100	$ 53,700	$1,410 plus 12% of the excess over $14,100
$ 53,700	$ 85,500	$6,162 plus 22% of the excess over $53,700
$ 85,500	$163,300	$13,158 plus 24% of the excess over $85,500
$163,300	$207,350	$31,830 plus 32% of the excess over $163,300
$207,350	$518,400	$45,926 plus 35% of the excess over $207,350
$518,400	—	$154,793.50 plus 37% of the excess over $518,400

Schedule Y-2-Married Filing Separately

If taxable income is over:	But not over:	The tax is:
$          0	$    9,875	10% of taxable income
$    9,875	$ 40,125	$987.50 plus 12% of the excess over $9,875
$ 40,125	$ 85,525	$4,617.50 plus 22% of the excess over $40,125
$ 85,525	$163,300	$14,605.50 plus 24% of the excess over $85,525
$163,300	$207,350	$33,271.50 plus 32% of the excess over $163,300
$207,350	$311,025	$47,367.50 plus 35% of the excess over $207,350
$311,025	—	$83,653.75 plus 37% of the excess over $311,025

Answer 1

 

Answer:- In 2020, Sheryl is claimed as a dependent on parents tax return

A. Sheryl liability is $0

Note that Sheryl has no unearned income and is not subject to kiddie tax. She is earning below the Taxable income and also below Taxable age slab.

The standard deduction for dependent child is total earned Income plus $350 upto a maximum of $12000. Thus a child can earn upto $12000 without paying Income tax

Description. Amount. Explanation

Gross income. $ 6100 In wages all

Earned income

Standard deduction for. $ 6450 Earned income

dependent on another tax return. + $350

Taxable income $0. (1+2)

Total tax. $0

B. Interest income is an unearned Income.hence IT will be Taxable under the slab of trust and estates so tax liability as below:-

Particular. Amount

Gross income. $6100

Less:- standard deduction which is $1100

Greater $1100 or $350

Taxable Income. $5000

Gross unearned Income

Minus 2200 (6100-2200). $3900

Kiddie tax( 265 + 15% over 1300). $453

Taxable Income taxed at Sheryl's tax rate $1100

Tax on income taxed on ordinary rates. $110

Total tax liability. ($453+$110). $563

Tax rate. Taxable Income. Calculation. Total

10% 0-2650 2650*10%. 265

15% 2650-13150. 3900-2650

*15%. 188

Tax liability $ 453

C. Since Sheryl is a dependent child under age 24 and a full time student her unearned income will be taxed similarly in part B.i.e her tax liability is $453.