Question

Sneha, age 14, is a dependent of her parents. Her only source of income in 2020 is $6,000 of interest income on bonds given her by her grandparents. Sneha's marginal tax rate is 10%, and her parent's marginal tax rate is 35%. Sneha's tax for 2020 is (kiddie tax rules for 2020). Please show work.

A) $1,200.

B) $1,440.

C) $2,200

D) $6,000

Answer 1

Unearned Income	$ 6,600
Kiddie tax rule -2020
	Tax $
First $1,100	0	No Tax
Next $ 1,100 @10%	110	( 1,100 x 10% )
Balance at parent marginal rate	1,330	( 6,000 - 2,200 ) x 35%
Total tax for 2020	1,440
Correct answer is option B (i.e. $ 1.440 ).