Question

The alternative minimum taxable income (AMTI) is typically ________ the regular income tax base.

   A.  
exactly the same as

    B.  
smaller than

    C.  
larger than

    D.  
about the same as

Married TP's filing jointly in 2019. They have five children under age 17 for whom they may claim the child tax credit. Their AGI was $425,000. What amount of child tax credit may they claim on their tax return?

   A.  
$10,000

    B.  
$11,000

    C.  
$8,750

    D.  
$5,000

Answer 1

A) Answer is option C.

The alternative minimum taxable income ( AMTI) IS typically larger than the regular income tax base.

Explanation: The alternative minimum tax gets triggered due to more tax payers gets deduction and remains non taxable or less tax to be payable, to curb it and increase the tax collection the alternative minimum tax is introduced. The AMT can also include other income soirces not counted by the regular income tax. Hence the alternative minimum taxable income is typically larger than regular income tax base.

B) Answer is option C

The child tax credit that may be claimed on tax return =$8750.

Explanation: Married TP's family has 5 children who are below 17 years hence they are dependent and thus the parents can get tax credit of $2000 per child during the year 2019.

Further from 2019 there is phaseout of married filing jointly beyond income of $400000. For each $1000 beyond the AGI you will loose $50 from child tax credit.

Accordingly, child tax credit

= 5 children × $2000 each - [{(425000-400000)/1000}× $50.]

= $10000 - (25000/1000) × $50.

= $10000 - 25×$50

=$10000-$1250

= $8750.