Question

Rhianna 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:

The correct answer is $11,000.

Explanation:

According top the scenario, the given data are as follows:

Total AGI = $419,400

The threshold limit for married filing jointly = $400,000

So, Exceeding threshold = $419,400 - $400,000 = $19,400

For each $1,000 exceeding, available child tax credit reduced by $50.

So, Phase out = $19,400 ÷ $1,000 = 19.4 or 20

Amount to be reduced = 20 × $50 = $1,000

Child Tax credit is $2,000 per child.

So, Eligible credit = (6 child × $2,000) - $1,000

= $11,000