Question

Trey has two dependents, his daughters, ages 14 and 17, at year-end. Trey files a joint return with his wife. What amount of child credit will Trey be able to claim for his daughters under each of the following alternative situations? Use Exhibit 8-8. Problem 8-70 Part-b b. His AGI is $420,000.

Answer 1

Before phase out, Trey has a $2,000 child tax credit for his qualifying child aged 14 (under 17 at year end) and $500 child tax credit for qualifying dependent aged 17 (not under 17 at year end).

The amount of child credit to be claimed is calculated as follows:

(1) $420,000 AGI - $400,000 Married Filing Jointly threshold = $20,000

(2) $20,000 Excess AGI divided by 1,000 = 20

(3) 20 * $50 = $1,000. This is the amount of phase out.

(4) $2,500 allowable credit - $1,000 = $1,500

Amount of child credit Trey will be able to claim for his daughters is $1,500.