During 2020, Jasmine (age 12)received $6,500 from a corporate bond. She also received $600 from a savings account established for her by her parents. Jasmine lives with her parents and she is claimed as a dependent in their tax return. Whatis Jasmine's gross tax liability? ( Use Tax Rate Schedule, Standard deduction , Estates and Trusts.)

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Quizplus · Accepted Answer

Jasmine's unearned income exceeds the standard deduction for dependents ($1,100 in 2020), so she is subject to the "kiddie tax." Her taxable income is $6,000 ($6,500 + $600 - $1,100). The first $1,100 is taxed at 0%, the next $1,100 at 10%, and the remaining $3,800 at the parent's tax rate, which is typically higher than the child's rate. Assuming the parent's rate is 24%, the tax is $110 (10% of $1,100) + $912 (24% of $3,800), totaling $922.

During 2020, Jasmine (Age 12)received $6,500 from a Corporate Bond