Question

Problem 3-37 (Algorithmic) (LO. 3, 7) Taylor, age 18, is daimed as a dependent by her parents. For 2019, she has the following income: $5,000 wages from a summer job, $1,430 interest from a money market account, and $1,875 interest from City of Boston bonds. If required, round your answers to the nearest dollar. If an amount is zero, enter "0". a. Taylor's standard deduction for 2019 is s Taylor's taxable income for 2019 is s b. Compute Taylor's "net unearned income" for the purpose of the kiddie tax. Click here to access the 2019 tax rate schedule. Compute Taylor's tax liability.

Answer 1

Answer-

Wages	$5,000
Interest from money market	$1,430
Interest from city of Boston bonds	exempt from tax
Total income	$6,430
less:standard deduction	-5,350 *
personal exemption	0**
Taxable Income	$1,080

*standard deduction is equal to 1,100 or (earned income 5,000+ 350 =5,350)whichever is greater .

**personal exemption is not available if you claiming as dependent.

a-Taylor's standard deduction for 2019= $5,350

Taylor's taxable income for 2019= $1,080

b-Net unearned income will be 1,430+0-1,875 = 0. Since bond interest is exempt it will not considered. Hence net unearned income will be Zero.

c-Taylor's tax liability-$1,080*10%= $108

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