Question

Estates and Trusts If taxable income is over: But not over: The tax is: $ 0 $ 2,600 10% of taxable income $ 2,600 $ 9,300 $260 plus 24% of the excess over $2,600 $ 9,300 $12,750 $1,868 plus 35% of the excess over $9,300 $12,750 $3,075.50 plus 37% of the excess over $12,750 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. She received $5,200 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

Qualified dividends are dividends that meet the requirements to be taxed as capital gains.

Sheryl is claimed as a dependent on her parents' tax return.

Sheryl has not worked during the year 2019, hence she has unearned income in the form of Dividends of $5,200

It is more than the threshold income of $1,100 so she has to file her tax return

The tax Rates are $0-2650 0%

                            $2651-12950 15%

                            Over $12950 20%

So the tax that needs to be paid is (5200-2650) X 15% = $382.50