Question

In: Accounting

9- Please explain Determine the amount of child tax credit in each of the following cases:...

9- Please explain

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 $214,400 and four child(ren). $0
b. A single parent with modified AGI of $80,338 and three child(ren). $0
c. A married couple filing a joint return, with modified AGI of $408,503 and three child(ren). $0

Solutions

Expert Solution

Child Tax Credit:

The Child Tax Credit is worth up to $2,000 for each qualifying child.

The Child Tax Credit amounts change as your modified adjusted gross income (AGI) increases. In fact, once you reach a certain threshold, the credit decreases or phases out.

And the credit is reduced $50 for every $1,000 — or fraction thereof — that your modified AGI is more than:

  • $200,000 if filing as single, head of household, or qualifying widow(er)
  • $400,000 if married filing jointly
  • $200,000 if married filing separately

Based on the above, please see below the calculation of child tax credit:

Sr No Particulars Child Tax Credit Allowed($) Explanation
a A single parent with modified AGI of $214,400 and four child(ren).                  7,250 [($2000*4(children)] less [($ 50 * 15) credit is reduced $50 for every $1,000]
b A single parent with modified AGI of $80,338 and three child(ren).                  6,000 Since modified AGI is below $ 200,000. Therefore, 3 children * $ 2,000.
c A married couple filing a joint return, with modified AGI of $408,503 and three child(ren).                  5,550 [($2000*3(children)] less [($ 50 * 9) credit is reduced $50 for every $1,000]

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