Lucy is 17 years old and a dependent of her parents. She receives $9,000 of wages from a part-time job and $10,400 of taxable interest from bonds she inherited. (The tax year is 2019.)
Lucy is 17 years old and a dependent of her parents. She receives $9,000 of wages from a part-time job and $10,400 of taxable interest from bonds she inherited. (The tax year is 2019.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Lucy is 17 years old and a dependent of her parents. She receives $9,000 of wages from a part-time job and $10,400 of taxable interest from bonds she inherited. (The tax year is 2019.)
Read the requirement4.
|
Amount
|
|
|---|---|
|
Taxable income
|
|
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Tax
|
|
1: Reference
STANDARD DEDUCTION
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Filing Status
|
|
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Married individuals filing joint returns and surviving spouses
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$24,400
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|---|---|
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Heads of households
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$18,350
|
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Unmarried individuals (other than surviving spouses and heads of households)
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$12,200
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Married individuals filing separate returns
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$12,200
|
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Additional standard deduction for the aged and the blind; Individual who is married and surviving spouses
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$1,300*
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Additional standard deduction for the aged and the blind; Individual who is unmarried and not a surviving spouse
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$1,650*
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Taxpayer claimed as dependent on another taxpayer’s return: Greater of (1) earned income plus $350 or (2) $1,100.
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|
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* These amounts are $2,600 and $3,300, respectively, for a taxpayer who is both aged and blind.
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2: Reference
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Child's tax rate brackets:
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|
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10% tax rate: Portion of taxable income not over ETI plus $2,600
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24% tax rate: Portion of taxable income over ETI plus $2,600 but not over ETI plus $9,300
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|
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35% tax rate: Portion of taxable come over ETI plus $9,300 but not over ETI plus $12,750
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37% tax rate: Portion of taxable income over ETI plus $12,750
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3: Reference
Single
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If taxable income is:
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The tax is:
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|---|---|
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Not over $9,700. . . . . . . . . . . . . . . . .
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10% of taxable income.
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Over $9,700 but not over $39,475. .
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$970.00 + 12% of the excess over $9,700.
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Over $39,475 but not over $84,200
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$4,543.00 + 22% of the excess over $39,475.
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Over $84,200 but not over $160,725
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$14,382.50 + 24% of the excess over $84,200.
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Over $160,725 but not over $204,100
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$32,748.50 + 32% of the excess over $160,725.
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Over $204,100 but not over $510,300
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$46,628.50 + 35% of the excess over $204,100.
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Over $510,300. . . . . . . . . . . . . . . . . .
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$153,798.50 + 37% of the excess over $510,300.
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4: Requirements
Determine Lucy's taxable income and tax.
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