Adjusted Gross Income:
Earned Income:
Income from Acting: $2900
Unearned Income:
Interest Income: $12200
Taxable Qualified Dividend Income: $14000
$26200
Total Adjusted Gross Income $29100
Less: The Larger of:
Standard Deduction $950
Or
$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