Final answer:
To determine how much of Terri's income is taxed at her own tax rate and her parents' rate, we need to understand marginal tax rates. Based on the information provided, we can assume simplified tax rate structures. For Terri's current income, all of it would be taxed at her own tax rate of 10%.
Step-by-step explanation:
When determining how much of Terri's income is taxed at her own tax rate and her parents' rate, we need to understand how marginal tax rates work. Marginal tax rates refer to the tax rate applied to the last dollar of income. In Terri's case, since she earned $5,000 in interest income and $3,000 from part-time jobs, her total income is $8,000. We need to determine the tax rate for Terri's income by considering her parents' tax bracket as well. If Terri's parents have a higher tax bracket than Terri, it might be more advantageous for her to be taxed at her own tax rate.
Let's assume that Terri's parents are in a higher tax bracket and have a marginal tax rate of 30%. Terri's own tax rate can be determined by calculating her taxable income and using the marginal tax rates for her tax bracket. Since Terri is claimed as a dependent on her parents' tax return, some of her earned income may not be included in her taxable income. It's important to note that tax rates and brackets may vary depending on the country and year. Based on the information provided, we can assume a simplified tax rate structure.
For example, let's assume that the first $10,000 of income is taxed at a rate of 10%, the next $20,000 at 15%, and any income above $30,000 at 25%. If we apply this tax rate structure to Terri's income of $8,000, her taxable income falls within the 10% tax bracket. Therefore, all of Terri's income would be taxed at her own tax rate of 10%. However, if Terri's income exceeded $10,000, only the portion of her income exceeding $10,000 would be taxed at the next marginal tax rate.
It's important to consult with a tax professional or use accurate tax tables to determine the exact tax rates and brackets for a given year and country.