Question

Tim Thompson is a single taxpayer and he qualifies for the entire Child Tax Credit. In 2019, Tim has a modified adjusted gross income (MAGI) of $203,000. When Tim prepares his income tax return his Child Tax Credit will be reduced by what amount

Answer 1

Tim Thompson's Child Tax Credit will be reduced by $50 because his MAGI exceeds the single filer threshold by $3,000, and the credit reduces by $50 for every $1,000 above the threshold.

Step-by-step explanation:

The question at hand involves calculating the reduction of the Child Tax Credit for Tim Thompson, based on his modified adjusted gross income (MAGI). Since the question presents Tim Thompson's MAGI as $203,000, it is important to note the thresholds for the phase-out of the credit. The Internal Revenue Service (IRS) sets income thresholds where the Child Tax Credit begins to phase out - $200,000 for single filers and $400,000 for married filing jointly. For income above these thresholds, the credit is reduced by $50 for every additional $1,000 in income. Hence, Tim's Child Tax Credit will be reduced by $50 for the $3,000 exceeding the $200,000 threshold.

Furthermore, to address Tim's situation properly, one would need to look at the tax year in question's actual IRS rules because the Child Tax Credit and income thresholds can change with new tax laws. The figures given are based on typical rules and may not reflect the specific year's tax law in which Tim is filing.

Answer 2

$1,850

Step-by-step explanation:

The maximum child tax credit per qualifying child was 2,000 during 2019. But this amount starts to phase out if the single person's MAGI is higher than $200,000 per year.

It phases out by $50 for every $1,000 that your MAGI exceeds the threshold, in this case = 3 x $50 = $150 phase out.

Total deduction = $2,000 - $150 = $1,850