Satish,age 11,is a dependent of his parents.His only source of income in 2016 is $3,000 of interest income on bonds given him by his grandparents.Satish's marginal rate is 10%,and his parent's marginal rate is 28%.Satish's tax is
A)$357.
B)$195.
C)$546.
D)$300.

Question

Quizplus · Accepted Answer

Satish's interest income is subject to the "kiddie tax" rules. The first $1,050 is tax-free, the next $1,050 is taxed at Satish's rate of 10%, and the remaining $900 is taxed at his parent's rate of 28%. So, $1,050 * 0% + $1,050 * 10% + $900 * 28% = $0 + $105 + $252 = $357.

Satish,age 11,is a Dependent of His Parents