Pyrrha, a 12-year-old dependent of Epimetheus and Pandora, received $8,200 of interest income in 2019. What is Pyrrha's gross tax liability for the year?
What will be an ideal response?
$1,186.
Answer computed as follows:
| Description | Amount | Explanation | |||
| (1) | Gross income/AGI (all unearned income) | $ | 8,200 | $8,200 interest All unearned income | |
| (2) | Standard deduction | 1,100 | Minimum for taxpayer claimed as a dependent on another return (no earned income, so must use minimum) | ||
| (3) | Taxable income | $ | 7,100 | (1) - (2) | |
| (4) | Gross unearned income minus $2,200 | 6,000 | (1) - $2,200 | ||
| (5) | Net unearned income | 6,000 | Lesser of (3) or (4) | ||
| (6) | Kiddie tax | $ | 1,076 | [$260 + (((5) ? $2,600) × 24%)], trust and estate tax rate schedule | |
| (7) | Taxable income taxed at Pyrrha's rate | 1,100 | (3) - (5) | ||
| (8) | Tax on taxable income using Pyrrha's tax rates | $ | 110 | (7) × 10% (See single filing status, $1100 taxable income.) | |
| Pyrrha's total tax liability | $ | 1,186 | (6) + (8) | ||
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