Refundable Child Tax Credit. Pat and Diedra Dobson file a joint tax return for 2019. The...

Refundable Child Tax Credit.

Pat and Diedra Dobson file a joint tax return for 2019. The Dobsons’ AGI is $30,900, of which $27,300 is taxable wages. The Dobsons’ take the standard deduction and claim as dependents to their two teenage children, ages 13 and 15. Other than the child tax credit, the Dobsons’ do not claim ant nonrefundable personal tax credits. Compute the Dobsons’ nonrefundable and refundable child tax credit.

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Expert Solution

Taxable income of couple = AGI - standard deduction = $30,900 - $24,000 = $6,900

Tax applicable on $6,900 taxable income for taxpayer filing joint return using IRS tables is $693.

Child tax credit available = 2 children X $2,000 = $4,000. But tax liability restricts child tax credit to $693.

Tax payer is eligible for refundable child tax credit as calculated in the below form:

Refundable child tax credit is $2,800 and non-refundable credit is $693.

ekkarill92 answered 1 year ago

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