[jannag]

NINJA Question –

Hi everyone! A am super confused…

Ok, here is the question:

CPA 2014.0 – REG

Filing Status and Exemptions, Question # 1185

Chris, age 5, has $3,000 of interest income and no earned income this year. Assuming that the current

applicable standard deduction is $1,000, how much of Chris’s income will be taxed at Chris’s parents’

maximum tax rate for 2013?

A. $0

B. $100

C. $2,200

D. $3,000

The correct answer is A.

Chris has interest income of $3,000. Subtracting the $1,000 standard deduction for dependents, $2,000 of

income is taxable. The limit for children is $2,000, to be taxed at their own rate. This leaves $0 taxable at

the parents’ higher rates.

Isn’t the answer supposed to be $1000? Since 2013 child’s standard deduction =$1000, and another $1000 is taxable at child’s tax rate.

[Anonymous]

I just did that MCQ a few minutes ago and thought the same thing.

[Anonymous]

I just did that MCQ a few minutes ago and thought the same thing.

[jannag]

Good to know I'm not the only one )

[jannag]

Good to know I'm not the only one )

[h0wdyus]

how important is this one. I never got around to doing kiddie tax. should I do it or skip it.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[h0wdyus]

how important is this one. I never got around to doing kiddie tax. should I do it or skip it.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[Anonymous]

It's just a tiny detail in individual tax, but you know how they try to get you with the tiny details. It could always end up in a Sim. The way I understand it is:

Child's unearned income

– $1000 (Std deduction–not taxable)

– $1000 (Taxed at child's rate)

---

Net unearned income (Taxed at parent's rate)

[Anonymous]

It's just a tiny detail in individual tax, but you know how they try to get you with the tiny details. It could always end up in a Sim. The way I understand it is:

Child's unearned income

– $1000 (Std deduction–not taxable)

– $1000 (Taxed at child's rate)

---

Net unearned income (Taxed at parent's rate)

[h0wdyus]

Hmm. Okay will try to get it done. Seems a little confusing. Yager skipped and so did I . 🙂

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[h0wdyus]

Hmm. Okay will try to get it done. Seems a little confusing. Yager skipped and so did I . 🙂

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[Author]

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