Question

Determine the total allowable 2017 earned income credit in each of the following situations:

a. Rina is single and earns $6,800 in salary for the year. In addition, she receives $2,200 in unemployment compensation during the year.

b. Lachlan is single with one dependent child. During the year, he earns $8,000 as a writer and receives alimony of $10,000 and child support of $5,000.

c. Zorica is a single parent with two dependent children. She earns $19,000 from her job as a mechanic. She also receives $3,000 in child support from her ex-husband.

d. Elliot and Pam are married and have three dependent children. Elliot and Pam earn $12,000 and $9,000 from their jobs, respectively. They receive $800 in interest and $1,000 in dividend income. Assume the taxpayer files a joint return.

Answer 1

Solution and Explanation:

a. Rina groos income is $9000 and must be used in credit phase out using the earned income table in the appendix in the chapter 8 Elc.

b. the $5000 lachlan recevived from ex-wife in child support is not transferable income. however, the $10000 of alimony is transferable.

c. Both zorica's earned income and adjusted gross income are $19000 and the $3000 is child support is not considerable transferable income, finally zorica's income is $4494.

d. eliot and pam's earned income is $21000 but they adjusted gross income is $22800 thier Ela is $5378.