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.) Problem 8-51 Part-d d. She received $7,000 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

(d) -- She received $7000 of qualified dividend income. This is her only source of income. She is 16 years old at year-end.

Answer -

Step - (1) - Relevant Note -

Sheryl is subject to the kiddie tax because she is under age 18 and has unearned income. In 2019 a dependent child’s unearned income above $2200 is taxed at the rates that apply to trusts and estates.

.

Step - (2) - Computation of Sheryl's Tax Liability for Tax Year 2019 -

Taxable Income = $7000 - $2200 = $4800.

	Tax Rate	Taxable Income ($)	Calculation	Amount ($)
I.	10%	0 - 2600	2600 * 10%	260
II.	24%	2600 - 9300	($4800 - $2600) * 24%	528
Tax Liability			I + II	788