Question

Trey has two dependents, his daughters, ages 14 and 17, at year-end. Trey files a joint return with his wife.

What amount of child credit will Trey be able to claim for his daughters under each of the following alternative situations?

Married filing jointly

$400,000

a. His AGI is $106,900.

b. His AGI is $425,600.

c. His AGI is $421,900, and his daughters are ages 10 and 12.

Answer 1

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Answer

The child tax credit is 2000 $ for a qualifying dependent.For being a qualified child, dependent must be below 17 years old.When the return is filed jointly the phase out of credit will begin when the MAGI exceeds 400000 $ . The credit falls by 50 $ for every 1000 $ excess of MAGI over the threshold limit of 400,000 $ .


a) AGI of 106900
Only one child is below the age of 17 . The MAGI is below th the threshold limit . Trey can avail full credit for one child .
Therefore he will be able to avail 2000 $


b) AGI of 425,600
Excess Agi over threshold = 425600-400000 = 25600 $
Phase out = 25600/1000 = 25.6
Rounded off the factor to 25
Phase out amount = 26 * 50 = 1300
Credit amount = 2000 -1300 $
= 700 $

c) AGI of 421900, and daughters are of 10 and 12 years age
Excess AGI over threshold = 421900-400,000 = 21,900 $
Phase out factor = 21900/1000 = 21.9
Rounded off factor to 22
Phase out amount = 22*50 = 1100
Credit amount = 4000- 1100
= 2900 $

Both the daughters qualify for credit as the age is below 17 .