Glen and Mary have two children, Chad, age 12, and Linda, age 8. For 2016, Chad has $4,000 in net unearned income and Linda has net unearned income of $1,000. If the total parental tax for 2016 is $1,500, how would the tax be allocated between Chad and Linda?

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Quizplus · Accepted Answer

The tax is allocated based on the proportion of each child's unearned income to the total unearned income. Chad's unearned income is $4,000 and Linda's is $1,000, making a total of $5,000. Chad's share is 80% ($4,000/$5,000) and Linda's is 20% ($1,000/$5,000). Therefore, Chad's tax is 80% of $1,500, which is $1,200, and Linda's tax is 20% of $1,500, which is $300.

Glen and Mary Have Two Children, Chad, Age 12, and Linda