Question

Carolyn has an AGI of $38,000 (all from earned income), two qualifying children, and is filing as a head of household for 2018. What amount of earned income credit is she entitled to? (Exhibit 8-10)

A) $0

B) $1,643

C) $3,461

D) $4,073

E) $5,716

Hint: Don’t forget the phase-out

Answer 1

In the tax year 2018 Earned income and adjusted gross income (AGI) must each be less than $45802 for single,head of household or widowed having 2 qualified childrens then the amount of income credit she entitiled is $5176 because the maximum amount of credit for Tax Year 2018 is:

• $6,431 with three or more qualifying children
• $5,716 with two qualifying children
• $3,461 with one qualifying child
• $519 with no qualifying children

Here she has two qualified children so she is entitiled to income tax credit of $5176