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.)

b. She received $7,000 of interest income from corporate bonds she received several years ago. This is her only source of income. She is 16 years old at year-end.

Answer 1

Particular	Amount
Gross income	$ 7,000
Less: Standard Deduction (Greater of i) $ 1,100 or ii) $ 350 + $ 0 (earned income)	$ 1,100
Taxable income	$ 5,900
Gross unearned income minus $ 2,200 ($ 7,000 - $ 2,200)	$ 4,800
Kiddie tax ($ 260 plus 24% over $ 2,600)	$ 788
Taxable income taxed at Sheryl's tax rates	$ 1,100
Tax on income taxed on ordinary rates	$ 110
Total Tax Liability ($ 788 + $ 110)	$ 898