Question

The two factors that may limit the maximum child tax credit of $1000 per qualifying child are:

A. Tax liability and earned income above the phaseout thresholds for three or more children.

B. Earned income above the phaseout thresholds and taxpayer filing status.

C. Tax liability and modified adjusted gross income above the phase out thresholds.

D. Modified adjusted gross income above the phaseout thresholds and three or more children.

Answer 1

Answer:

Correct option is:

C. Tax liability and modified adjusted gross income above the phase out thresholds.

Explanation:

The claim of child tax credit depend depends on the taxpayer’s filing status, modified adjusted gross income (MAGI) and tax liability. The amount of credit gets reduced if:

1.  Modified adjusted gross income (MAGI) is above the limit applicable based on taxpayer’s filing status

2. 'Tax liability' minus 'the majority of the nonrefundable credits' is less than the maximum child tax credit

As such option C is correct and other options A, B and D are incorrect.