Question

In 2020, Amanda and Jaxon Stuart have a daughter who is 1 year old. The Stuarts are full-time students and they are both 23 years old. Their only sources of income are gains from stock they held for three years before selling and wages from part-time jobs.

What is their earned income credit in the following alternative scenarios if they file jointly? Use Exhibit 8-10. (Leave no answer blank. Enter zero if applicable.)

a. Their AGI is $18,400, consisting of $6,700 of capital gains and $11,700 of wages.

     

b. Their AGI is $18,400, consisting of $10,100 of lottery winnings (unearned income) and $8,300 of wages.

c. Their AGI is $28,150, consisting of $23,100 of wages and $5,050 of lottery winnings (unearned income). (Round your intermediate calculations to the nearest whole dollar amount.)

d. Their AGI is $28,150, consisting of $5,050 of wages and $23,100 of lottery winnings (unearned income). (Round your intermediate calculations to the nearest whole dollar amount.)

e. Their AGI is $10,100, consisting of $10,100 of lottery winnings (unearned income).

EXHIBIT 8-10 2020 Earned Income Credit Table

Qualifying Children	(1) Maximum Earned Income Eligible for Credit	(2) Credit %	(3) Maximum Credit (1) × (2)	(4) Credit Phase-Out for AGI (or earned income if greater) Over This Amount	(5) Phase-Out Percentage	No Credit When AGI (or earned income if greater) Equals or Exceeds This Amount (4) + [(3)/(5)]
Married taxpayers filing joint returns
0	$ 7,030	7.65%	$ 538	$14,680	7.65%	$21,710
1	10,540	34	3,584	25,220	15.98	47,646
2	14,800	40	5,920	25,220	21.06	53,330
3+	14,800	45	6,660	25,220	21.06	56,844
All taxpayers except married taxpayers filing joint returns
0	$ 7,030	7.65%	$ 538	$ 8,790	7.65%	$15,820
1	10,540	34	3,584	19,330	15.98	41,756
2	14,800	40	5,920	19,330	21.06	47,440
3+	14,800	45	6,660	19,330	21.06	50,954

Answer 1

Answer :

b.