Question

Kyle is 16 years old and a dependent of his parents. He has $3,000 is unearned income and $900 is earned income. Kyle is in the 10% tax bracket and Kyle's parents are in the 25% tax bracket. What is Kyle's total tax liability?

Answer 1

Kyle's total tax liability is $390.

Step-by-step explanation:

To calculate Kyle's total tax liability, we need to calculate the tax on his earned and unearned income separately. First, we calculate the tax on his earned income of $900 using the tax bracket rates. Since Kyle is in the 10% tax bracket, his tax on earned income is $900 * 0.10 = $90.

Next, we calculate the tax on his unearned income of $3,000. Since the unearned income is not subject to the tax brackets, the tax on unearned income is simply $3,000 * 0.10 = $300.

Finally, we add the taxes on earned and unearned income together to get Kyle's total tax liability. $90 + $300 = $390.