Question

Nia is 12 years old, and her only income is $5,500 of interest income from a bank account with money her parents have given her to save for college. If Nia's parent's tax rate is 35 percent, and Nia's portion of income is taxed at 10 percent, what is Nia's income tax liability?

Answer 1

Nia's income tax liability on her $5,500 of interest income, taxed at 10 percent, would be $550.

Step-by-step explanation:

The question involves calculating the income tax liability for Nia, who is a 12-year-old with an income of $5,500 from interest. To find Nia's income tax liability, we multiply her income by her tax rate, which is 10 percent.

Therefore, Nia's tax liability can be calculated as follows:

Income Tax Liability = Interest Income × Tax Rate

Income Tax Liability = $5,500 × 0.10

Income Tax Liability = $550

This means that Nia would owe $550 in income taxes for the interest income she earned.