Question

I answered A correct, but b is not making any sense,, please help. Taylor, age 16, is a dependent of her parents. For 2018, she records the following income: $3,600 wages from a summer job, $1,365 interest from a money market account, and $2,100 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 2018 is? $3950 Taylor's taxable income for 2018 is? $1015 b) Compute Taylor's "net unearned income" for the purpose of the kiddie tax. Compute Taylor's tax liability.

Answer 1

Net unearned income = unearned income - standard deduction - statutory deduction = 1365-3950-1050=0 (income cannot be negative)

Net unearned income is 0, so the taxable income $1015 is completely net earned income which will be taxed at 10% regular rate for a single taxpayer. Therefore, Taylor's tax liability =$102 (1015*10%)