Question

Mike and Linda are a married couple who file jointly. They have three dependent children who are​ full-time students in

2018.Mike and Linda provided $8,000 of support for each child. Information for each child is as​ follows:

Compute

KarenKaren​'s

​tax, assuming the interest income is taxable.

Begin by computing the taxable income for

KarenKaren.

Minus:
Taxable income	Compute KarenKaren​'s ​tax, assuming the interest income is taxable. Begin by computing the taxable income for KarenKaren. Minus: Taxable income

	Karen	Susan	Amelie
Age	21	18	16
Wages	$3,000	$11,000	$5,900
Interest income	2,800	2,400	2,200

Answer 1

Hi

Let me know in case you face any issue:

Solution: As per 2018 tax rules, Answer can be different for different tax year: Answer are highlighted in yellow: Karen has more than $2100 unearned income, kiddle tax rates will be applicable on her income: Year 2018 Earned Income $ 3,000 Interest Income (Unearned) $ 2,800 AGI $ 5,800 Standard deduction Greater or 1050 or (earned income +350) $ -3,350 Taxable income $ 2,450 Unearned Income $ 2,450 Statutory Deduction - subjec to ordinary rates $ 1,050 (2100-1050) Net Unearned Income, subject to kiddle tax rates $ 1,400 $ 105 Tax on first 2100 at ordinary rate (2100-1050)*10% Tax on Income subjec to kiddle tax: first 2550 *10% (1400*10%) Karen Tax (105+104) $ $ 140 245