US Taxation-Just 2 questions.Just final answer required

Earned Income Credit Table It is not necessary to compute the credit as shown in Example 21. To simplify the com- pliance process, the IRS issues an Earned Income Credit Table for the determination of the appropriate amount of the credit. This table and a worksheet are included in the instructions available to individual taxpayers.

Eligibility Requirements Eligibility for the credit depends not only on the taxpayer meeting the earned income and AGI thresholds but also on whether he or she has a qualifying child. The term qualifying child generally has the same meaning here as it does for purposes of deter- mining who qualifies as a dependent (see text Section 3-4a).

In addition to being available for taxpayers with qualifying children, the earned income credit is also available to certain workers without children. It is available only to taxpayers ages 25 through 64 who cannot be claimed as a dependent on another

E X H I B I T 13.3 Earned Income Credit and Phaseout Percentages

Tax Year

Number of Qualifying Children

Earned Income Base Amount

Credit Percentage

Maximum Credit

Phaseout Base

Phaseout Percentage

Phaseout Ends at Income of

2017 Married, Filing Jointly

No children $ 6,670 7.65 $ 510 $13,930 7.65 $20,600

One child 10,000 34.00 3,400 23,930 15.98 45,207

Two children 14,040 40.00 5,616 23,930 21.06 50,597

Three or more children 14,040 45.00 6,318 23,930 21.06 53,930

Other Taxpayers

No children $ 6,670 7.65 $ 510 $ 8,340 7.65 $15,010

One child 10,000 34.00 3,400 18,340 15.98 39,617

Two children 14,040 40.00 5,616 18,340 21.06 45,007

Three or more children 14,040 45.00 6,318 18,340 21.06 48,340

2016 Married, Filing Jointly

No children $ 6,610 7.65 $ 506 $13,820 7.65 $20,430

One child 9,920 34.00 3,373 23,740 15.98 44,846

Two children 13,930 40.00 5,572 23,740 21.06 50,198

Three or more children 13,930 45.00 6,269 23,740 21.06 53,505

Other Taxpayers

No children $ 6,610 7.65 $ 506 $ 8,270 7.65 $14,880

One child 9,920 34.00 3,373 18,190 15.98 39,296

Two children 13,930 40.00 5,572 18,190 21.06 44,648

Three or more children 13,930 45.00 6,269 18,190 21.06 47,955

E X A M P L E

21

In 2017, Grace Brown, who is married, files a joint return and otherwise qualifies for the earned income credit. Grace receives wages of $26,000, and she and her husband earn no other income. The Browns have one qualifying child. The current earned income credit is $3,400 ($10,000 � 34%) reduced by $331 [($26,000 � $23,930) � 15:98%]. As a result, the earned income credit is $3,069.

If, instead, the Browns have three or more qualifying children, the calculation produces a credit of $6,318 ($14,040 � 45%) reduced by $436 [($26,000 � $23,930) � 21:06%]. As a result, the Browns’ earned income credit is $5,882.

CHAPTER 13 Tax Credits and Payment Procedures 13-13

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