Question

J and K are a married couple filing jointly, with two children age 14 and 18. They have adjusted gross income of $417,250 for 2018. How much is their allowable child tax credit?

            a.     $1,638

            b.     $2,000

            c.     $1,100

            d.     $1,600

            e.     $2,500

Answer 1

Answer is option (C) $1100

Explanation;

J and K will get child credit for only one child because one child is above 17 year age.

As per new rule of 2018, it is clear that for each qualifying child there will be $2000 child credit but AGI should not exceed $400000. If AGI exceed $400000 then for every $1000 of AGI exceeds, $50 of child credit will be phase out.

Thus Allowable child credit will be;

$2000 – ($17250 / $1000) * $50

$2000 – (18 * $50)

= $1100

Note: $250 will be counted as full $1000 for exceeding AGI.