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Trey claims a dependency exemption for both of his daughters, ages 14 and 17, at year-end. Trey files a joint return with his wife. What amount of child credit will Trey be able to claim for his daughters under each of the following alternative situations? a. His AGI is $104,000. b. His AGI is $125,300. c. His AGI is $130,600, and his daughters are ages 10 and 12.
Expert Answer
a. Trey’s AGI is less than the limit of $110,000 for a joint return. Trey has a $1,000 tax credit ($1,000 × 1 child under 17 years of age ). A child must be underage 17 to qualify for the child tax credit.
Answers is $ 1000.
b. Below are the calculations
$125,300 AGI – $110,000 limit = $15,300
$15,300 excess AGI divided by 1,000 = 15.3 round off 16
16 × 50 = $800. This amount is the phase-out.
$1,000 allowable credit minus 800 = $200
Answer is $ 200.
c. Trey now has two children under age 17 at year end that qualify for the child tax credit.
$130,600 AGI – $110,000 Limit = $20,600
$20,600 excess AGI divided by 1,000 = 20.6 round off 21
21 × 50 = $1050. This amount is the phase-out.
$2,000 allowable credit minus 1050 = $950
Answer is $950
