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This post addresses kiddie tax calculation scenarios.

Mary is 13. She receives annual interest payments of $4000. What is her taxable income in 2011? Her parents claim her as a dependent. What is her parent's 2011 taxable income?

John is 16. In 2011, he earned $6000 working a part-time job and received $5000 of interest income. His parents claim him as a dependent and they do not have any qualified dividends or capital gains. The parents' taxable income is $70,000 and they paid $9,750 on their taxable income. (I realize you do not have all of the facts. You can make up a number for the parent's tax on the revised taxable income.) What is John's total tax?

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Mary is 13. She receives annual interest payments of $4000. What is her taxable income in 2011? Her parents claim her as a dependent. What is her parent's 2011 taxable income?

-- Her taxable income is $4,000. According to the IRS, a dependent who is single, not blind, and under age 65 must file a tax return with unearned income if her income is over $950. Interest income is considered unearned income, so she therefore must file. We are assuming that the interest is taxable interest. There are some forms of interest income (like on bonds and government assets) that is not taxable. Assuming it is, the $4,000 is taxable to her even though she is a dependent on her parent's tax return. Mary will pay taxes on $4,000 (10% tax, so $400).

What is her parent's 2011 taxable income?

This is impossible to accurately determine without the ...

Solution Summary

The solution calculates and explains the correct amount in kiddie tax for each scenario presented.

$2.19