Question

In 2018, Sheryl is claimed as a dependent on her parents' tax return. Sheryl did not provide more than half her own support. What is Sheryl's tax liability for the year in each of the following alternative circumstances?

A)She received $7,000 of interest income from corporate bonds she received several years ago. This is her only source of income. She is 16 years old at year-end.

B)She received $7,000 of interest income from corporate bonds she received several years ago. This is her only source of income. She is 20 years old at year-end and is a full-time student.

C) She received $7,000 of qualified dividend income. This is her only source of income. She is 16 years old at year-end.

Answer 1

A

AGI		7,000
Less:
Standard deduction	1,050
Itemized deduction	-
Higher of the two		1,050
Taxable income		5,950
Income tax liability		595.00

B

Same at $595

C

Qualified dividends are taxable at 0%. Tax payable is $0