Question

Rihanna and Jay are married filing jointly in 2018. They have six children under age 17 for whom they may claim the child tax credit. Their AGI was $419,400. What amount of child tax credit may they claim on their 2018 tax return

Answer 1

Answer: Child tax credit = $11,030

Step-by-step explanation:

The Earned Income Tax Credit (EITC) is a popular credit for parents and guardians. For the 2018 tax year, the EITC grants up to $2,000 per qualifying child a dependent under 17 who lived with the taxpayer. The credit phases out at an AGI of $200,000 for single filers and $400,000 for married couples filing jointly.

Since Rihanna and Jay are married and filing jointly, we have ;

$419,400 - $400,000)/1,000 = 19.4

19.4 x $50 = $970 phase out. The credit phases out by $50 for each $1,000 of modified adjusted gross income (MAGI)

Since the EITC awards up to $2,000 per qualifying child a dependent under 17, we have $2000 x 6= $12,000

$12,000 - $970 = $11,030 child tax credit.