Answer:
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
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Answer:
6%
Explanation:
Current interest rate on one year bond = 5%
Forward interest rate on one year bond = 7%
To Calculate the interest rate on two year bond we use this:
Interest rate = [Current interest rate on one year bond + Forward interest rate on one year bond]/2
Interest rate = [5 + 7]/2 = 12/2 = 6%
Therefore,
The interest rate on two-year bond is equal to 6%.
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