Problem 9-29 (LO. 1, 3, 6)

Terri, age 16, is a dependent of her parents in 2019. During the year, Terri earned $5,000 in interest income and $3,000 from part-time jobs.

Click here to access the 2019 tax rate schedule and 2019 Estate and Trust Tax Rate Schedule.

a. What is Terri's taxable income? $

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To reduce the tax savings that result from shifting income from parents to children, the net unearned income of certain children is taxed as if it were the parents' income. This provision, commonly referred to as the "kiddie tax," applies to any child who is under age 19 (or under age 24 if a full-time student) and has unearned income of more than $2,200.

b. What is Terri's net unearned income? $

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Correct

c. What is Terri's tax liability? $

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Incorrect

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Partially correct