Question

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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.)

d. She received $7,400 of qualified dividend income. This is her only source of income. She is 16 years old at year-end. (Round your final answer to 2 decimal places.)

Answer 1

	particulars	Amount
a	Gross income	$        7,400
b	Earned income +$350	$           350
c	Standard deduction	$        1,100
d	Applicable standard deduction	$        1,100	Higher of b and c
e=a-d	Taxable income	$        6,300
f=a-2200	Gross unearned income less $2,200	$        5,200
g	Kiddie tax	$           884	(2600*10%)+((5200-2600)*24%)
h=e-f	Taxable income (Taxed at 10%)	$        1,100
i=h*10%	Tax @10%	$           110
j=g+i	Total tax liability	$           994