Question

Ill and his spouse Gracie work for different companies. In 2022, Will earned $58,000 and Gracie earned $45,000. They jointly contribute $2,500 to charity every year and they have no other itemized deductions. They have 1 child, age 5. They file their taxes jointly. What deductions and/or credits are Will and Gracie eligible for?

Answer 1

Will and Gracie can take the standard deduction for a married couple and may be eligible for the Child Tax Credit, although their income exceeds the limits for the Earned Income Tax Credit.

Step-by-step explanation:

Will and Gracie, who file their taxes jointly, have a combined income of $103,000 for the year 2022. With one dependent child, they may be eligible for several tax credits and deductions on their tax return. They can take the standard deduction for a married couple filing jointly, which for the tax year 2022 is $25,900.

Furthermore, they can utilize the charitable contribution of $2,500 as an itemized deduction if it is more beneficial than the standard deduction, which in their case, it is not. They might also be eligible for the Child Tax Credit, which can significantly reduce their tax liability.

The Earned Income Tax Credit (EITC) is unlikely to apply as their combined income exceeds the phase-out limits for a married couple with one child. As the thresholds and credits often change, they should verify the current tax year's credits and deductions with the IRS or a tax professional.