Question

Joshua and Ellen are married and file a joint return. Three individuals qualify as their dependents: their two children, ages 5 years and 6 months, and Ellen’s son from a previous marriage, age 18. All parties are U.S. citizens. Joshua and Ellen’s combined AGI is $68,000. Compute their child tax credit and dependent tax credit.

Answer 1

The Child tax credit would be $4,000 and the dependent tax credit would be $500.

Step-by-step explanation:

There are 3 children, one age is 5 years and other is 6 months so both qualify for child tax credit and 3rd one is of 18 years, he will not qualify for child tax credit as it should be under 17. Therefore, he must be dependent.

Child tax credit would be computed as:

As one child age is 5 years and other one is 6 months, so both are eligible under the child tax credit. So, the Child tax credit per qualifying child is $2,000

As the combined income is $68,000 which is less than the threshold limit of $200,000. Therefore, the full credit will be claimed.

In this case, there are two child. Therefore,

= $2,000 × 2

= $4,000

For dependent, the tax credit amounts to $500