Question

# In 2019, Simon, age 12, has interest income of \$900 and dividend income of \$4,000. He...

In 2019, Simon, age 12, has interest income of \$900 and dividend income of \$4,000. He has no investment expenses. Determine Simon's net unearned income and total tax liability.

Click here to access the 2019 tax rate schedule and 2019 Estate and Trust Tax Rate Schedule. If required, round the tax liability the nearest dollar.

 Net unearned income is \$. Simon's total tax is

His net unearned income = \$ 4,000 + \$ 900 = \$ 4,900

Because unearned income of minors include dividend income and interest income. So,here both the income of Simon must be considered for computing his net unearned income.

Simon's net unearned income for 2019 = \$ 4,900

Less: Unearned income threshold for 2019 = \$ 2,200

Taxable unearned income of Simon for 2019 =[ \$ 4,900 - \$ 2,200] =  \$ 2,700

Calculation for Simon's total tax for 2019

 Range of income Rate of tax Tax amount \$ 0 to \$ 2,600 10% \$ 260 \$ 2,601 to 2700 24% \$ 24 Simon's total tax \$ 284