Question

Boyd and Susan are married filing jointly in 2020. They have three children for whom they may claim the child tax credit. Their AGI was $415,000. What amount of child tax credit may they claim on their 2020 tax return? Multiple Choice О O $0 $3,000 $5,250 $6,000

Answer 1

Calaculation of amount of child tax credit may they claim on 2020 tax return:

The correct option is

• $5250

Explanation:

Given that,

Filing status of taxpayer - Married filing jointly

Adjusted Gross income(AGI) = $415000

Number of children eligible for child tax credit = 3

As per tax rules,

A taxpayer is eligible for tax credit of $2000 for each dependent child who is below the age of 17 years. Also, Considering the filing status of taxpayer, there is phaseout limit of AGI.

If AGI of taxpayer exceeds the phaseout limit then there is reduction in tax credit by $50 for each $1000 above phaseout limit. For taxpayer married filing jointly, the phaseout limit of AGI is $400000

Here for the taxpayer,

Excess of AGI over phaseout limit = $415000 - $400000 = $15000

Reduction in tax credit = (Excess AGI/$1000)×$50 = ($15000/$1000)×$50 = $750

Eligible Child tax credit = $2000 each for 3 children = $2000×3 = $6000

Therefore,

Total child tax credit that can be claimed

= Eligible tax credit for 3 children - Reduction in credit due to excess AGI over phaseout limit

= $6000 - $750

= $5250

_______×________

Let me know if you have any queries, All the best,

Kindly UPVOTE,

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