Diane is a single taxpayer who qualifies for the earned income credit. Diane has two qualifying children who are 3 and 5 years old. During 2018, Diane's wages are $18,300 and she receives dividend income of $700.Earned Income Credit Phase-Out RangesNumber of Qualifying ChildrenOther than joint filersJoint filersPhaseout Begins Phaseout Ends Phaseout Begins Phaseout EndsNone$8,490$15,270$14,170$20,9501$18,660$40,320$24,350$46,0102$18,660$45,802$24,350$51,4923 or more$18,660$49,194$24,350$54,884Calculate Diane's earned income credit using the EIC table in Appendix B.

Question
Asked Oct 27, 2019

Diane is a single taxpayer who qualifies for the earned income credit. Diane has two qualifying children who are 3 and 5 years old. During 2018, Diane's wages are $18,300 and she receives dividend income of $700.

Earned Income Credit Phase-Out Ranges
Number of Qualifying Children Other than joint filers Joint filers
Phaseout Begins   Phaseout Ends   Phaseout Begins   Phaseout Ends
None $8,490 $15,270 $14,170 $20,950
1 $18,660 $40,320 $24,350 $46,010
2 $18,660 $45,802 $24,350 $51,492
3 or more $18,660 $49,194 $24,350 $54,884

Calculate Diane's earned income credit using the EIC table in Appendix B.

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Expert Answer

Step 1

Tax credits: Tax credit reduces the tax liability of the tax payer. Through tax credit an individual tax payer can determine the tax payable (tax liability) by deducting tax credit from total tax payable.

 

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