In: Accounting
In 2019, what is the earned income credit allowed Don Andersen, a head of household taxpayer, assuming he has adjusted gross income of $9,500 (consisting of interest income of $3,500 and earned income of $6,000? He maintains his household with his daughter.
Answer :
Earned income credit is a refundable tax credit available to taxpayers who have earned income.
For 2019 for a head of household earned income and adjusted gross income (AGI) must each be less than the following :
$50,162 with three or more qualifying children
$46,703 with two qualifying children
$41,094 with one qualifying child
$15,570 with no qualifying children
Investment income must be $3,600 or less for the year.
Maximum credit will be :
$6,557 with three or more qualifying children
$5,828 with two qualifying children
$3,526 with one qualifying child
$529 with no qualifying children
In above Question :
Adjusted gross income of Don Andersen = $9,500
Interest income = $3,500
Number of Children = 1
So, Don Andersen qualifies under above provisions.
Earned income = $6,000
Maximum Credit available = $3,526 with one qualifying child
So, Earned income credit allowed Don Andersen = $3,526