Ask Question
28 August, 16:25

Assume Karen is 12 years old and her only income is $2,500 of interest income from a bank account with money her parents have given her to save for college. What are the options Karen has for filing her tax return?

+1
Answers (1)
  1. 28 August, 18:04
    0
    Since Karen is a minor, she can receive up to $950 in unearned income per year without paying taxes or having to file a tax return.

    Since she receives a larger amount $2,500 - $950 = $1,550, she must pay taxes for the extra amount depending on which type of account her parents opened for her.

    Karen's parents probably opened a 529 Education Savings Plan, and if that is the case, she doesn't need to pay any federal taxes. If Karen's parents opened her a custodial account, then she will have to pay taxes for the $1,550 above the $950 threshold. Minors are responsible for filing their own taxes or their parents can file taxes for them. If either Karen or her parents pay taxes, they should pay = $1,550 x 10% = $155
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Assume Karen is 12 years old and her only income is $2,500 of interest income from a bank account with money her parents have given her to ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers