Question

John and his wife Kila have four children, and they file their tax return jointly. Three of the children are under 17 and live at home. The fourth child is 20 and lives away at university. John and Kila’s combined AGI for the year was $439,300. The phase-out for the child tax credit begins at an AGI of $400,000. How much child tax credit can they claim on their 2019 tax return?

$4,500

$4,535

$6,500

$8,000

Answer 1

Taxpayers can claim a child tax credit (CTC) of up to $2,000 for each child under age 17 who is a citizen. The credit is reduced by 5 percent of adjusted gross income over $200,000 for single parents ($400,000 for married couples). If the credit exceeds taxes owed, taxpayers can receive up to $1,400 of the balance as a refund, known as the additional child tax credit (ACTC) or refundable CTC.

a $500 credit is available to dependents who are not eligible for the $2,000 CTC for children under 17 . Before 2018, these individuals would not have qualified for a tax credit but would have qualified for a dependent exemption

PARTICULARS	CALCULATION	AMOUNT
CHILDREN BELOW 17 YEARS	2000*3	6000
DEPENDENT CHILDREN ABOVE 17 YEARS	500*1	500
TOTAL CREDIT		6500
CRDIT REDUCTION	(439300-400000)*5%	-1965
CRDIT AVAILABLE	(6000-1965)	4535

SO $ 4535 CREDIT IS AVAILABLE