Chris' net unearned income is $800.
Unearned income is all profits that are not earned such as Social security benefits, pensions, nation disability bills, unemployment blessings, interest profits, dividends, and cash from pals and households. In-type income is meals, safe haven, or both that you get without spending a dime or for less than its honest market value.
If at age five he has $3,000 of interest income and no earned income this year. assuming the current laws are applicable,
The net unearned income of a dependent child under age 18 is taxed at the parent's marginal rate under the kiddie tax rules.
Net unearned income is calculated by taking the child's unearned income and reducing it by the dependent child's allowable standard deduction of $1,100 plus an additional $1,100 (which is taxed at the child's marginal tax rate).
Chris' net unearned income is taxed at his parents' marginal rate;
= $3,000 interest income - $1,100 standard deduction - $1,100 taxed at child's marginal rate.
= $800
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