An unmarried taxpayer has three children. Two of the children (ages 11 and 14) l
ID: 2596487 • Letter: A
Question
An unmarried taxpayer has three children. Two of the children (ages 11 and 14) live with the taxpayer. The third child (age 19), lives in a dorm as a full-time student at a state university for most of the year and spent the summer working as a lifeguard in a different state (earning $8,000). The taxpayer’s 1040 reflects a W2 for $40,000 and AGI of $38,000.
MAGI
Your filing status is single head of household, or qualifying widow(er).
At least
But less than
No Children
One child
Two children
Three Children
37,800
37,850
0
110
1,249
1,932
37,850
37,900
0
102
1,239
1,921
37,900
37,950
0
94
1,228
1,910
37,950
38,000
0
86
1,217
1,900
38,000
38,050
0
78
1,207
1,889
38,050
38,100
0
70
1,196
1,879
38,100
38,150
0
62
1,186
1,868
38,150
38,200
0
54
1,175
1,858
.....
.....
39,800
39,850
0
0
828
1,510
39,850
39,900
0
0
817
1,500
39,900
39,950
0
0
807
1,489
39,950
40,000
0
0
796
1,479
40,000
40,050
0
0
786
1,468
40,050
40,100
0
0
775
1,458
40,100
40,150
0
0
765
1,447
10,150
40,200
0
0
754
1,437
What is the taxpayer’s earned income credit, using the excerpts below from the earned income credit tables?
Explanation / Answer
To claim Earned income credit,Tax payer must meet certain rules:
1. Taxpayer's adjusted gross income(AGI) must be less than $47955 ($53505 for married filing jointly) if the taxpayer has 3 or more qualifying children.
2. Taxpayer's child must meet the relationship, age, residency and joint return tests.
3. Taxpayer's age must be at least age 25 but under age 65.
4. Taxpayer must be a U.S Citizen or resident alien all year.
Relationship test:
To be your qualifying child, a child must be your-
Age test :
Your child must be:
Under age 19 at the end of the year 2016 and youner than you.
Residency test :
Your child must have lived with you in the U S A for more than half year.
In the given question, the third child has not lived with taxpayer for Half year. Therefore third child is not eligible to claim Earned Income Credit.
It is assumed that the taxpayer age is more than or equal to 25.
Therefore the taxpayer's Earned Income credit is $ 1207.
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