Question

[The following information applies to the questions displayed below.] In 2018, 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.)

a. She received $5,400 from a part-time job. This was her only source of income. She is 16 years old at year-end.

	Tax liability

b. She received $5,400 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

c. She received $5,400 of interest income from corporate bonds she received several years ago. This is her only source of income. She is 20 years old at year-end and is a full-time student.

	Tax liability

d. She received $5,400 of qualified dividend income. This is her only source of income. She is 16 years old at year-end.

	Tax liability

2018 Tax Rate Schedules

Individuals

Schedule X-Single

If taxable income is over:	But not over:	The tax is:
$           0	$    9,525	10% of taxable income
$    9,525	$ 38,700	$952.50 plus 12% of the excess over $9,525
$ 38,700	$ 82,500	$4,453.50 plus 22% of the excess over $38,700
$ 82,500	$157,500	$14,089.50 plus 24% of the excess over $82,500
$157,500	$200,000	$32,089.50 plus 32% of the excess over $157,500
$200,000	$500,000	$45,689.50 plus 35% of the excess over $200,000
$500,000	—	$150,689.50 plus 37% of the excess over $500,000

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

If taxable income is over:	But not over:	The tax is:
$           0	$ 19,050	10% of taxable income
$ 19,050	$ 77,400	$1,905 plus 12% of the excess over $19,050
$ 77,400	$165,000	$8,907 plus 22% of the excess over $77,400
$165,000	$315,000	$28,179 plus 24% of the excess over $165,000
$315,000	$400,000	$64,179 plus 32% of the excess over $315,000
$400,000	$600,000	$91,379 plus 35% of the excess over $400,000
$600,000	—	$161,379 plus 37% of the excess over $600,000

Schedule Z-Head of Household

If taxable income is over:	But not over:	The tax is:
$           0	$ 13,600	10% of taxable income
$ 13,600	$ 51,800	$1,360 plus 12% of the excess over $13,600
$ 51,800	$ 82,500	$5,944 plus 22% of the excess over $51,800
$ 82,500	$157,500	$12,698 plus 24% of the excess over $82,500
$157,500	$200,000	$30,698 plus 32% of the excess over $157,500
$200,000	$500,000	$44,298 plus 35% of the excess over $200,000
$500,000	—	$149,298 plus 37% of the excess over $500,000

Schedule Y-2-Married Filing Separately

If taxable income is over:	But not over:	The tax is:
$           0	$    9,525	10% of taxable income
$    9,525	$ 38,700	$952.50 plus 12% of the excess over $9,525
$ 38,700	$ 82,500	$4,453.50 plus 22% of the excess over $38,700
$ 82,500	$157,500	$14,089.50 plus 24% of the excess over $82,500
$157,500	$200,000	$32,089.50 plus 32% of the excess over $157,500
$200,000	$300,000	$45,689.50 plus 35% of the excess over $200,000
$300,000	—	$80,689.50 plus 37% of the excess over $300,000

Tax Rates for Net Capital Gains and Qualified Dividends

Rate*	Taxable Income
	Married Filing Jointly	Married Filing Separately	Single	Head of Household	Trusts and Estates
0%	$0 - $77,200	$0 - $38,600	$0 - $38,600	$0 - $51,700	$0 - $2,600
15%	$77,201 - $479,000	$38,601 - $239,500	$38,601 - $425,800	$51,701 - $452,400	$2,601 - $12,700
20%	$479,000+	$239,500+	$425,801+	$452,401+	$12,701+

*This rate applies to the net capital gains and qualified dividends that fall within the range of taxable income specified in the table (net capital gains and qualified dividends are included in taxable income last for this purpose).

Estates and Trusts

If taxable income is over:	But not over:	The tax is:
$ 0	$ 2,550	10% of taxable income
$ 2,550	$ 9,150	$255 plus 24% of the excess over $2,550
$ 9,150	$12,500	$1,839 plus 35% of the excess over $9,150
$12,500		$3,011.50 plus 37% of the excess over $12,500

Answer 1

Part A

Description	amount	explanation
1. Gross income/ AGI	5400	5400 in wages. All earned income
2. Standard deduction for dependent on another tax return	(5700)	earned income+ 350
3. Taxable income	0	1 + 2
4. Total tax	0

Part B

Description	amount	explanation
1. Gross income/ AGI (all unearned income)	5400	5400 Interest income. All unearned income
2. Minimum standard deduction	1050	minimum for taxpayer claimed as a on another tax return
3. $350 plus earned income	350	350+0 earned income
4. Standard deduction for dependent on another tax return	1050	greater of 2 and 3
5. Taxable income	4350	1 - 4
6. Gross unearned income minus 2100	3300	1-2100
7. Net unearned income	3300	lesser of 5 and 6
8. Kiddie tax	435	(2550*10%)+(24%*(3300-2550))
9. Taxable income at Sheryl's tax rate	1050	5 - 7
10. Sheryl's income tax rate	10%	single filing status
11. Tax on taxable income using Sheryl's rate	105	8 + 11
Total tax	540

Part C

Description	amount	explanation
1. Gross income/AGI (all unearned income)	5400	5400 Interest income. All unearned income
2. Minimum standard deduction	1050	minimum for taxpayer claimed as a dependent on another tax return
3. $350 plus earned income	350	350 + 0 earned income
4. Standard deduction for dependent on another tax return	1050	greater of 2 and 3
5. Taxable income	4350	1 - 4
6. Gross unearned income minus 2100	3300	1- 2100
7. Net unearned income	3300	Lesser of 5 and 6
8. Kiddie tax	435	(2550*10%)+(24%*(3300-2550))
9. Taxable income at Sheryl's tax rate	1050	5 - 7
10. Sheryl's income tax rate	10%	single filing status
11. Tax on taxable income using Sheryl's tax rate	105
Total tax	540	8 + 11

Part D

Description	amount	explanation
1. Gross income/AGI (all unearned income)	5400	5400 Interest income. All unearned income
2. minimum standard deduction	1050	minimum for taxpayer claimed as a dependent on another tax return
3. $350 plus earned income	350	350+0 earned income
4. Standard deduction for dependent on another tax return	1050	greater of 2 and 3
5. Taxable income	4350	1-4
6. Gross unearned income minus 2100	3300	1-2100
7. Net earned incom	3300	lesser of 5 and 6
8. Kiddie tax	262.50	(2600*0%)+(15%*(4350-2600))
9. Income taxed at Sheryl's tax rate	1050
10. Sheryl's preferential tax rate	0%
11.tax on income using preferential tax rate	0
Total tax	262.50