Question

Mary lived with her 5 year old daughter,Amy, and her best friend,Sarah,for all of 2020.Sarah lost her job in late 2019 and Mary agreed to let her move into her house in exchange for full time child care until she is able to find employment. Mary earned 185000 in 2020. Sarah did not earn any money in 2020,and Mary paid 100% of the household support. How much,if any, will Mary benefit from the combination of the Child Tax Credit and the Credit for Other Dependents in 2020? a) 0 b) 500 c) 2000 d) 2500

USA

Answer 1

Child Tax Credit-

1. The Maximum amount of deduction under Child Tax Credit is $2000 per qualifying child.

2. Qualifyling Child must be under 17 years old.

Credit for Other Dependents-

1. Maximum Deduction or benefit under Credit for Other dependents is $500 per qualifying dependents.

2.The qualifying dependent must be a U.S. citizen, U.S. national, or U.S. resident alien.

3. Qualifying dependents may be any other person except relatives, if such person lived with you all the years as a member of the household.

4. Gross income of the qualifying dependent must be below $4200.

5. The support to such dependent must be more than 50%.

Hence in the given case total benefit will be $2500.($2000 for Child Tax Credit and $500for the Credit for Other Dependents in 2020, as all the conditions are fulfilled).

Answer - d ($ 2500)

answered by: anonymous