Calculate tax liability, Taxation


I am zainab ali, i want help in Tax assignment..

In 2012 Joe, age 15, earned $2900 from acting and had $12,200 of interest income and $14,000 of taxable qualified dividend income. Joe’s parents claim an exemption for him on their own return. His parents’ MTR is 25%. What is Joe’s tax liability?

Posted Date: 3/14/2013 12:57:02 AM | Location : United States

Adjusted Gross Income: 

Earned Income: 

            Income from Acting:                                                  $2900 

Unearned Income: 

            Interest Income:                                                          $12200

            Taxable Qualified Dividend Income:                         $14000 



Total Adjusted Gross Income                                                                      $29100 

Less:    The Larger of:

Standard Deduction                                 $950 


$300 plus earned income          


Earned income:     Income from acting    

                              ($300 + $2900)           $3200                          $3200



Total Taxable Income                                                                                                           $25900

Joe’s Tax Liability                                        


Joe’s Net Unearned Income


Interest Income                                               $12200

Taxable Qualified Dividend Income:             $14000


Net Unearned Income:                                   $26200


Unearned Income > $1900                             $24300



Out of $ 24300 unearned Income Taxable Qualified Income is taxable @15%


So, Tax on Taxable Qualified Dividend Income


$14000*15%                           =          $2100 


Tax on other Unearned Income taxable on parent’s taxed rates:


Parent’s tax rate is 25%


($10300*25%)                                    =          $2576



Tax on taxable Income minus Net Unearned Income


Tax at child rate @ 10%


($25900-$24300)*10%           =          $160


Total Tax Liability                =          $4836  

Posted by Expertsmind | Posted Date: 3/14/2013 12:57:56 AM

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