Question

# A taxpayer's earned income and AGI are both \$34,500. The taxpayer's total tax liability (before any...

A taxpayer's earned income and AGI are both \$34,500. The taxpayer's total tax liability (before any tax credits) is \$1,300. The taxpayer's only tax credits are an \$840 child and dependent care credit and the child tax credit for two qualifying children. The taxpayer's refundable child tax credit is:

 A-\$2,000. B-\$460. C-\$0. D-\$1,540. E-\$700.

The correct option is B

--------------------------------------------------------------------------------------------------------------------------

Hypothetically, the refundable child tax credit ought to be \$1000*2 = \$2000. Be that as it may, since the tax liability is \$1300 which is under \$2000, the tax bill will lessen to zero. So successfully you are using just \$460 of child tax credit.

--------------------------------------------------------------------------------------------------------------------------

Hope that helps.

Feel free to comment if you need further assistance J