Final answer:
The maximum exclusion amount for payments under written dependent care assistance plans for an individual filing as married filing jointly is $5,000. The Earned Income Tax Credit is designed to provide financial assistance and work incentives to low-income working families through a refundable tax credit that slowly phases out as income increases.
Step-by-step explanation:
The question pertains to the maximum exclusion amount for payments to employees under written dependent care assistance plans, when filing taxes as married filing jointly. According to the Internal Revenue Code, the exclusion amount in such a case cannot exceed $5,000.
To address the larger context of tax credits and avoiding a poverty trap, the Earned Income Tax Credit (EITC) is designed to assist low-income working families. The EITC provides a refundable tax credit that increases with earned income up to a maximum value, after which it begins to phase out slowly. This structure is intentional to ensure that as one earns more, they do not lose government support payments at the same rate as their earnings increase, thereby reducing the effective marginal tax rate and avoiding the disincentive to work that may be created by a strict cutoff.
For instance, in 2013, a single-parent family with two children could receive a maximum credit until their income reached a certain level, at which point the credit would no longer increase but also wouldn't decrease until reaching another specified income level. Beyond this, the credit would be reduced by a certain percentage for each additional dollar earned, until phasing out completely at a higher income threshold.