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Q: tax ( Answered 5 out of 5 stars,   0 Comments )
Subject: tax
Category: Business and Money > Accounting
Asked by: newbbie-ga
List Price: $10.00
Posted: 30 Sep 2005 08:07 PDT
Expires: 30 Oct 2005 07:07 PST
Question ID: 574621
12 year old income of 2800 interest. dad files as head of houshold in
the 25% tax bracket. what is the 12 year olds tax? I got 350.00..any
Subject: Re: tax
Answered By: neurogeek-ga on 04 Oct 2005 21:11 PDT
Rated:5 out of 5 stars

Because his or her investment income is more than $1600, the child is
required to file Form 8615.  Because you didn't indicate otherwise, I
assumed that the dad did not have any "Schedule D Tax", which is extra
tax on investment income.    I also assumed that the child didn't
itemize deductions or have any deductions or credits.

Publication 929 covers tax rules for children in detail.  

On the Form 8615, I have:
Part I:
1. 2800  Investment Income
2. 1600  
3. 1200  
4. 2000  Taxable Income
5. 1200 "Net Investment Income"

Part II:
6. ~50,000 Parent's income (AGI, line 37) (if less than $101,600, the
exact amount is irrelevant)
7. 0
8. 51,200  Child's Net Income + Parent's AGI
9. 8406
10. 8106 
11. 300  Difference between parent's tax with the child's income and without
12. Skip
13. 300  Difference between parent's tax with the child's income and without

Part III:
14. 800 Line 5 less Line 4
15. 81  Tax on line 15 (using the child's status as Single)
16. 381 Line 13 and Line 15
17. 201
18. 381 This is the child's tax on line 43 of the child's 1040.

The bottom line is that the child is taxed at the parent's rate for
anything over $1600 (less the child's exemptions over $1600), and at
the rate for his or her filing status for the first $1600, less

Publication 929, Tax Rules for Children and Dependents:

Form 8615, Tax for Children Under Age 14 With Investment Income of More Than $1600:

Instructions for Form 8615:

Instructions for 1040:

Hope that helps.
newbbie-ga rated this answer:5 out of 5 stars

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