Qualifying Children Case Study

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32. a. Thomas is not eligible for the earned income credit because he does not have a qualifying child and is not between the ages of 25 and 64. b. Shannon is eligible for the earned income credit because she has a qualifying child. As her earned income and AGI are below the income level where the earned income credit begins to phase out ($16,690 in 2011), Shannon will qualify for the maximum earned income credit. c. Keith and Susan are not eligible for the earned income credit because they do not have a qualifying child, and their income exceeds the disqualifying threshold for the credit that is available when there is not a qualifying child ($18,740 in 2011). d. Even though Colin does not have a qualifying child, he is eligible for…show more content…
12-20 and Example 28 38. For two or more children, the maximum expense allowed for purposes of the credit for child and dependent care expenses is $6,000. Actual child care expenses ($3,800) are less than this ceiling and also lower than Karen’s earned income of $9,000 (the spouse with the lesser earned income). Since their combined AGI is more than $43,000, the applicable rate for the credit is 20%. Thus, the credit allowed is $760 (20%  $3,800). pp. 12-20 and 12-21 40. a. Bernadette is eligible to take the American Opportunity credit for her son’s tuition costs and books, and the lifetime learning credit for the tuition expenses for her continuing professional education seminars. The costs for books incurred by Bernadette are ineligible for the credit. As Bernadette’s AGI ($103,000) is less than $160,000, Bernadette qualifies for a $2,500 American Opportunity credit. The lifetime learning credit is available per taxpayer on the first $10,000 of qualifying tuition expenses. Accordingly, her tuition ($2,000) would qualify for the credit during 2011. Therefore, Bernadette’s maximum lifetime learning credit would be $400 (20% × $2,000) for 2011. However, the $400 maximum credit would have to be reduced by $20 since her $103,000 AGI exceeds the threshold level of $102,000 for married

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