Question

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Trey has two dependents, 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? Use Exhibit 8-8.

EXHIBIT 8-8 Child Tax Credit Phase-Out Threshold

Filing Status	Phase-Out Threshold
Married filing jointly	$400,000
Married filing separately	200,000
Head of household and single	200,000

Source: §24(a).

a. His AGI is $105,400.

A. Amount of child tax credit: ???

b. His AGI is $424,000.

B. Amount of child tax credit: ???

c. His AGI is $430,800, and his daughters are ages 10 and 12.

C. Amount of child tax credit: ???

Answer 1

A. Amount of child tax credit $2,500
Because Trey’s AGI is less than the phase-out threshold ($400,000) for a joint return,Trey has a $2,000 child tax credit for his qualifying child age 14 (under 17) at year end and a $500 child tax credit for his qualifying dependent (not under 17 at year end).

B. Amount of Child tax Credit

=2000- [(424000-400000)/2000]*50
= 1400

C. Amount of Child tax credit
=2000*2- {(430800-400000)/2000}*50
= 3230