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Unearned Income of Minor Children and Certain Students (LO 6.4) Brian and Kim have a 12-year-old...

Unearned Income of Minor Children and Certain Students (LO 6.4) Brian and Kim have a 12-year-old child, Stan. For 2019, Brian and Kim have taxable income of $52,000, and Stan has interest income of $4,500. Click here to access the income tax rate schedules. If Stan's parents elected to report Stan's income on his parents' return, what would the tax on Stan's income be? $  

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Answer #1

Kiddie Tax: Any Unearned income earned by dependent child under 17 yrs of age,investment income is taxed in the following manner; first $1100 is covered by child standard deduction and there it is not taxable and the  $1100 is taxed at the child's tax rate which typically is 10% and the remaining is taxed at tax rates for trust and estates.

unearned income $4500

Child Standard standard deduction $1100

10% on remaining $1100

Remaining $2300 @ 24%

total tax (1100*10%)+(2300*24%)

= $110 + $552= $662

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Answer #2

it's $2300 @ 12%

=$110+$276=276

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Answer #3

unearned income $4500

threshold of $2,200

Child Standard standard deduction $1100 

($4,500 - $1,100=$3,400)

10% on remaining threshhold $1100

 ($3,400-$1,100= $2,300)

Remaining $2300  @ 12%

total tax (1100*10%)+(2300*12%)

= $110 + $276= $386


answered by: Myrna
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