Question

Determine the amount of child tax credit in each of the following cases:
	Child Tax Credit Allowed a. A single parent with modified AGI of $213,700 and two child(ren). b. A single parent with modified AGI of $78,042 and four child(ren). c. A married couple filing a joint return, with modified AGI of $408,104 and four child(ren).

Answer 1

A)

The Child Tax Credit (CTC) is designed to give an income boost to the parents or guardians of children and other departments.

Conditins to be Fulfilled :

• It only applies to dependents who are 16 or younger at the end of the calendar year. Those are considered as Qualifying Dependent Child.
• You need to have earned at least $2500 to qualify for the CTC.
• There is a $500 non refundable credit for qualifying dependents other than children.
• The Credit is worth upto $2,000 per qualifying dependent child.
• A person can take full advantage of the credit only if his Modified Adjusted Gross Income (MAGI) is under :

1. $400,000 for married filing jointly.

2. $200,000 for everybody else.

• You must have provided at least half of the child's support during the last year, and child must have lived with you atleast half the year.
• The child cannot file a joint return ( or file it onlt to claim refund).

Case - A :

A single parent with modified AGI of $213,700 and two children.

By going through the above conditions, the MAGI should be less than $200,000 for everybody other than a married couple filing jointly.

Points to be Noted :

• It is given that he/she is a single parent with two children.
• Modified Adjusted Gross Income is more than $200,000

Hence we can conclude that Child tax Credit is not available to this Tax Payer.

Case - B :

A single parent with modified AGI of $78,042 and four children.

By going through the above conditions, the MAGI should be less than $200,000 for everybody other than a married couple filing jointly.

Points to be Noted :

• It is given that he/she is a single parent with four children.
• Modified Adjusted Grss Income is less than $200,000.
• Since no proper explanation regaring the age and dependence of those four children is given, I am assuming that the four children are of at the age 16 or younger at the end of the calendar year and these children are depending on the single parent itself.
• Required conditions are satisfied including the condition that the person have to earn atleast $2500 to qualify for the CTC.

Since the Child Tax Credit available is $2000 per Qualifying Dependent Child with age 16 or less, all the four children are qualifiable for Child Tax Credit. Hence the ttal Child Tax Credit available to single parent is $8,000 ( $2,000*4).

Case -C :

A Married Couple filing a joint return, with modified AGI of $408,104 and four children.

By going through the above conditions, the MAGI should be less than $400,000 for a married couple who are filing the return jointly.

Points to be Noted :

• It is given that they are a married couple with four children.
• Modified Adjusted gross Income is more than $400,000.

Hence we can conclude that Child Tax credit is not available to this married couple.