Question

1. Trey has two dependents, his two 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 if his AGI is $422,000.

1. Trey has two dependents, his two daughters, ages 10 and 12, 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 if his AGI is $423,000.

1. Julie paid a day care center to watch her two-year old son this year while she worked as a computer programmer for a local start-up company. Julie paid $2,300 to the day care center and her AGI is $50,000 (all salary). What amount of child and dependent care credit can Julie claim?

1. Julie paid a day care center to watch her two-year old son this year while she worked as a computer programmer for a local start-up company. Julie paid $3,600 to the day care center and her AGI is $25,000 (all salary). What amount of child and dependent care credit can Julie claim?

Answer 1

To claim child tax credit the children age should be below 17.

Child tax credit is $ 2000 for per qualifying child

The child tax get reduced if the AGI exceeds the limit. The limit for couple filling jointly is $400000 and filling individually is $200000 .For each $1000 of income above threshold the child tax credit reduced by $50.

a)

Trey two daughters are aged 14 and 17 , to claim child tax credit the child age should be below 17.

Amount exceeding threshold $422000-400000= $22000

As said above the child tax credit reduced by $50 for every $1000 exceeds the AGI limit/threshold.

Child tax credit to be reduced= ($22000/$1000) 8$50

= $ 1100

Trey can claim only child tax credit only for one daughter as the other daughter age is 17 and to claim child tax credit the age of child should be below 17

Child tax credit= $ 2000- $ 1100

= $900

As the Trey AGI exceeds the threshold of $400000 he will be egible for only $ 900 as chicld tax credit.

b)

A given in the question Trey two daughters ages are 10 and 12 respectively , so he can claim Child tax credit for both the daughters

Amount exceeding threshold $423000-400000= $23000

As said above the child tax credit reduced by $50 for every $1000 exceeds the AGI limit/threshold.

Child tax credit to be reduced= ($23000/$1000) 8$50

= $ 1150

Trey can claim child tax credit for both the daughters as both age is below 17.

Child tax credit= (2 * $ 2000) - $ 1100

= $2850

As the Trey AGI exceeds the threshold of $400000 he will be egible for only $ 2850 as chicld tax credit.