Satish, age 11, is a dependent of his parents. His only source of income in 2018 is $8,000 of interest income on bonds given him by his grandparents, resulting in taxable income of $6,950. Under kiddie tax rules, calculation of tax requires dividing taxable income between net unearned income and earned taxable income. Satish's taxable income will be divided as follows:

Question

Quizplus · Accepted Answer

Under the kiddie tax rules, net unearned income is calculated by subtracting the standard deduction for dependents ($1,050 in 2018) from the total unearned income ($8,000), resulting in $6,950. However, the taxable income is $6,950, so the net unearned income is $5,900, and the earned taxable income is $1,050.

Satish, Age 11, Is a Dependent of His Parents