The Olympians have three children. The kiddie tax applies to unearned income received by which of...

The Olympians have three children. The kiddie tax applies to unearned income received by which of the following children?

Multiple Choice

Poseidon is a 20-year-old full-time student who does not support himself
Demeter is a 23-year-old full-time student who supports herself with a job at a grocery store
Zeus is 20 years old and not a student
Demeter is a 23-year-old full-time student who supports herself with a job at a grocery store and Zeus is 20 years old and not a student
None of the choices are correc

Expert Solution

Answer :

(a) Poseidon is a 20-year-old full-time student who does not support himself.

Reason : The kiddie tax applies to children who meet one of the following age requirements:

a) under the age of 18 at the end of the tax year,

b) age 18 at the end of the tax year and didn't have earned income that was more than half of your support, or

c) a full-time student of at least age 19 and under age 24 at the end of the tax year and who didn't have earned income that was more than half of your support ie. dependent full-time students

In this case, Poseidon satisfies the last condition since he is a dependent full time student who doesn’t support himself with a job or earnings and is within the age of 19 and 24. Therefore, Kiddie tax applies to unearned income received by Poseidon.

Other options are incorrect because of the following reasons :

Even though Demeter, a full time student, satisfies the age limit of last condition, she is not a dependent full time student since she supports herself with a job and in case of Zeus, he is not a student.

ekkarill92 answered 2 years ago

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