1. Two Questions, please D uDuring 2012, Jasmine (age 12) received $2,400 from a

Question

1.      Two Questions, please

D uDuring 2012, Jasmine (age 12) received $2,400 from a corporate bond. She also received $600 from a savings account established for her by her parents. Jasmine lives with her parents and she is their dependent. Assuming her parents' marginal tax rate is 28%, what is Jasmine's gross tax liability?

a.

$0     

b.

$95     

c.

$308     

d.   

$403

e.

Other

Om Omar reports a gross tax liability of $1,000 and claims $400 of nonrefundable personal credits, $700 of refundable personal credits, and $200 of business credits. What is his tax refund or tax liability due after applying the credits?

A.    $1,000 taxes payable

B.    $0 refund or taxes payable

C.    $700 refund

D.    $300 refunnd

a.

$0     

b.

$95     

c.

$308     

d.   

$403

e.

Other

Explanation / Answer

1)403$

Jasmine's taxable income is $2,050 ($3,000 minus $950 standard deduction). Her net unearned income is $1,100 ($3,000 gross unearned income minus $1,900). This is taxed at 28% ($308 tax).
The remaining $950 of her taxable income ($2,050 minus 1,100 taxed at parents' rate) is taxed at 10% ($95 tax). Total tax is $403 ($308 + 95).

2)$1,000 tax liability minus $400 nonrefundable personal credits minus $200 (business credit is nonrefundable) minus $700 refundable credit = ($300). (The last $700 is refundable.)

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