Question

 

In 2019, Sheryl is claimed as a dependent on her parents' tax return. 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, Estates and Trusts for reference. (Leave no answer blank. Enter zero if applicable.)

 

 

b. She received $5,300 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. Note: apply the kiddie tax rules as explained in the text book (using trust and estate tax rates).
     

Answer 1

Answer :

The tax status of sheryl is single .

The following tax rate has been used :

1)On the off chance that taxable income is over $ 0 yet not exactly $ 9,700 ,Tax rate is 10% for single citizens .

2)On the off chance that taxable income from estates and trust is over $ 2,600 however not exactly or below $ 9,300 the expense would be $ 260 plus  24% of excess over $ 2,600

Further note that kiddie tax is pertinent on earned income above $ 2,200 a cutoff defined by IRS.

Particulars	Amount	Amount
Gross income		$ 5,300[interest income]
Minimum standard deduction		$ 1,100
$ 350 + earned income	$ 350 + $0	$ 350
Standard deduction for dependent on another tax return	Higher of [ $ 1,100 and $ 350 ]	$ 1,100
Taxable income	$ 5,300 - $ 1,100	$ 4,200
Gross income - $ 2,200	= $ 5,300 - $ 2,200 = $ 3,100	$ 3,100
Net unearned income	Lesser of [$ 4,200 and $ 3,100 ]	$ 3,100
Kiddie tax[from trust and estate tax rate schedule]	=$ 260 + ($ 3,100 - $ 2,600)*24% = $ 260 + ($ 500*24%) = $ 260 + $ 120 = $ 380	$ 380
Taxable income taxed at sheryl's tax rate	$ 4,200 - $ 3,100 = $ 1,100	$ 1,100
Tax on taxable income using Sheryl's rate	10% on $ 1,100	$ 110
Total tax	$ 380 + $ 110	$ 490