Question

In 2018​, Lana​, a single taxpayer with AGI of $204,400​, claims three dependent​ children, all under age 17.

Reference:

joint returns: $400,000

single taxpayers: $200,000

married person filing separate returns: $200,000

What is the amount of her child credit?

Answer 1

1. Age test One of the major conditions to claim the Child Tax Credit is the "age" of the dependents. The age of the Child the taxpayer is claiming as his or her dependents shall be below the age of 17 years at the end of the Tax Year. In other words, the age of the dependents shall be 16 years or less at the end of the tax year. 2. From the tax year 2018, tax credit per child is $2,000. 3. Phasing out (decreasing) of tax credit → The phasing out of the Child Tax Credit will begin once the MAGI exceeds $200,000 in case of single tax payers. ($400,000 in case of joint returns filing status) → For each $1,000 (or part thereof) earned over $200,000, the Child Tax Credit will be reduced by $50. In this case, MAGI is $204,400 **Since the MAGI exceeds the phase-out threshold of $200,000, Lina can't claim entire $2,000 as child tax credit. Amount by which MAGI is exceed the phase-out threshold = $204,400 - $200,000 = $4,400 (Or) = ($1,000 x 4) + $400 *For each $1,000 (or part thereof) earned over $200,000, the Child Tax Credit will be reduced by $50.

Therefore, Amount by which tax credit is Phased Out = ($50 x 4) + $50 = $250 Therefore, Available Child Tax Credit = Total tax credit - Phased out amount = ($2,000 x 3) – $250 = $5,750 Total child tax credit available = $5,750