Question

Denise is divorced and files a single tax return claiming her two children, ages 7 and 9, as dependents. Her AGI for 2017 is $81,500. Denise's child tax credit for 2017 is:a. $0b. $350c. $1,000d. $1,650e. $2,000

Answer 1

Answer: The correct answer is d ( $1650

Step-by-step explanation: A tax credit is a tax incentive that a tax payer is allowed to remove from tax accrued. It is a credit granted to certain tax payers as a form of state support.

Tax credit for 2017 = ($1000 × no. of dependants allowed) - ((AGI - $75,000)/ $1000 × $50)

=($ 1000 × 2) - ( ( $ 81500 -$ 75 000) / $ 1000 × $ 50 )

= $2000 - ($6500/$1000)× $50

= $2000 - $6.5 × $50

= $ 2000 - $ 350

= $ 1650

Answer 2

$ 1650

Explanation:

Denise's child tax credit for 2017 = ( 2 × $ 1000) - ( ( $ 81500 -$ 75 000) / $ 1000 × $ 50 ) = $ 2000 - $ 350 = $ 1650 where 6.5 factor is rounded to nearest whole number