In 2018, Simon, age 12, has interest income of $8,960 and no earned income. He has...

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In 2018, Simon, age 12, has interest income of $8,960 and no earned income. He has...

In 2018, Simon, age 12, has interest income of $8,960 and no earned income. He has no investment expenses.

Simon's total tax is:

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Answer 1

Answer #1

Taxable income

Interest income	8960
Less: standard deduction	(1050)
Taxable income	7910

Net unearned income

Interest income	8960
Less: standard deduction	(1050)
Less: statutory deduction	(1050)
Net unearned income	6860

Earned taxable income

Taxable income	7910
Net unearned income	(6860)
Earned taxable income	1050

First, Earned income + 2550, 1050+2550 = 3600 will be taxed at 10% and tax on it will be $360 (3600*10%)

Next remaining 4310 (7910-3600) will be taxed at 24% and tax on it will be 1034.40 (4310*24%)

Therefore,

Simon's total tax = 360+1034.40 = $1394.40

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Answer 2

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