Question

Required information [The following information applies to the questions displayed below.] 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.) a. She received $6,900 from a part-time job. This was her only source of income. She is 16 years old at year-end. Tax liability

Answer 1

Part A

Description	Amount	Explanation
(1)Gross income/AGI	6900	$6900 in wages All earned income
(2)Standard deduction for dependent on another tax return	(7250)	Earned income + $350
(3)Taxable income	0	(1) + (2)
Total tax	0

Part B

Description	Amount	Explanation
(1)Gross income/AGI (All unearned income)	6900	$6900 interest income (All unearned income)
(2) Minimum standard deduction	(1100)	Minimum for taxpayer claimed as dependent on another return
(3) $350 plus earned income	350	$350 + 0 earned income
(4)Standard deduction for dependent on another tax return	1100	Greater of (2) and (3)
(5)Taxable income	5800	(1) − (4)
(6) Gross unearned income minus $2,200	4700	(1) − $2,200
(7)Net unearned income	4700	Lesser of (5) or (6)
(8)Kiddie tax	764	[($2600 x 10%) + ((7) - $2600) × 24%)], trust and estate tax rate schedule)
(9)Taxable income taxed at Sheryl’s tax rate	1100	(5) − (7)
(10)Sheryl’s income tax rate	10%	Single filing status
(11)Tax on taxable income using Sheryl’s rate	110	(9) × (10)
Total tax	874	(8) + (11)

Part C

Description	Amount	Explanation
(1)Gross income/AGI (All unearned income)	6900	$6900 interest income (All unearned income)
(2) Minimum standard deduction	1100	Minimum for taxpayer claimed as dependent on another return
(3) $350 plus earned income	350	$350 + 0 earned income
(4)Standard deduction for dependent on another tax return	1100	Greater of (2) and (3)
(5)Taxable income	5800	(1) − (4)
(6) Gross unearned income minus $2,200	4700	(1) − $2,200
(7)Net unearned income	4700	Lesser of (5) or (6)
(8)Kiddie tax	764	[($2600 x 10%) + ((7) - $2600) × 24%)], trust and estate tax rate schedule)
(9)Taxable income taxed at Sheryl’s tax rate	1100	(5) − (7)
(10)Sheryl’s income tax rate	10%	Single filing status
(11)Tax on taxable income using Sheryl’s rate	110	(9) × (10)
Total tax	874	(8) + (11)

Part D

Description	Amount	Explanation
(1)Gross income/AGI (All unearned income)	6900	$6900 dividend income (All unearned income)
(2) Minimum standard deduction	1100	Minimum for taxpayer claimed as dependent on another return
(3) $350 plus earned income	350	$350 + 0 earned income
(4)Standard deduction for dependent on another tax return	1100	Greater of (2) and (3)
(5)Taxable income	5800	(1) – (4)
(6) Gross unearned income minus $2,100	4700	(1) − $2,200
(7)Net unearned income	4700	Lesser of (5) or (6)
(8) Parents’ preferential rate	15%
(9)Kiddie tax	705	(7) x (8)
(10)Taxable income taxed at Sheryl’s tax rate	1100	(5) − (7)
(11) Sheryl’s preferential rate	0%
(12) Tax on income using Sheryl’s preferential rate	0	(11) × (12)
Total tax	705	(9) + (12)