Question

Child Tax Credit (LO 6.1) Calculate the child tax credit for the following taxpayers. Round any division "up" to the nearest whole number.

a. Jeremy is a single (head of household) father with $80,100 of AGI and has a dependent 8-year-old son: $

b. Jerry and Ann have $100,000 of AGI, file jointly, and claim two dependent preschool children: $

c. James and Apple have AGI of $118,250, file jointly, and claim two dependent children (ages 7 and 10): $

Answer 1

Part 1)

Jerry's AGI is $5,100 (80,100 - 75,000) above the threshold limit specified for single (head of household) for the year 2017. Therefore, the maximum deduction of $1,000 will be phased out for every $1,000 in excess of $75,000 by an amount of $50.

The value of phase out amount and child tax credit is determined as below:

Phaseout Amount = Excess Amount/1,000 = 5,100/1,000 = 5.1 rounded off to 6*50 = $300

Child Tax Credit = Maximum Tax Credit - Phaseout Amount = 1,000 - 300 = $700

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Part 2)

As the AGI is less than eligible/threshold limit of $110,000 specified for married individuals filing jointly, the couple will be entitled to claim the maximum tax credit of $1,000 per child.

Child Tax Credit = Maximum Amount Per Child*2 = 1,000*2 = $2,000

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Part 3)

Couple's AGI is $8,250 (118,700 - 110,000) above the threshold limit specified for married individuals filing jointly for the year 2017. Therefore, the maximum deduction of $1,000 will be phased out for every $1,000 in excess of $110,000 by an amount of $50.

The value of phase out amount and child tax credit is determined as below:

Phaseout Amount = Maximum Tax Credit Amount/1,000 = 8,250/1,000 = 8.25 rounded off to 9*50 = $450

Child Tax Credit = Maximum Tax Credit*2 - Phaseout Amount = 1,000*2 - 450 = $1,550