Their AGI is $28,000, consisting of $5,000 of wages and $23,000 of lottery winnings (unearned income). Note: Round your intermediate calculations to the nearest whole dollar amount. Their AGI is $10,000, consisting of $10,000 of lottery winnings (unearned income).
Their AGI is $28,000, consisting of $5,000 of wages and $23,000 of lottery winnings (unearned income). Note: Round your intermediate calculations to the nearest whole dollar amount. Their AGI is $10,000, consisting of $10,000 of lottery winnings (unearned income).
Chapter3: Computing The Tax
Section: Chapter Questions
Problem 25P
Related questions
Question
100%
In 2022, Amanda and Jaxon Stuart have a daughter who is 1 year old. The Stuarts are full-time students and are both 23 years old. Their only sources of income are gains from stock they held for three years before selling and wages from part-time jobs.
What is their earned income credit in the following alternative scenarios if they file jointly?
- Their AGI is $28,000, consisting of $5,000 of wages and $23,000 of lottery winnings (unearned income).
Note: Round your intermediate calculations to the nearest whole dollar amount.
- Their AGI is $10,000, consisting of $10,000 of lottery winnings (unearned income).
![(1)
Maximum Earned
Qualifying Income Eligible
Children
for Credit
0
1
2
3+
$ 7,320
10,980
15,410
15,410
0
1
2
3+
Credit %
7.65%
34
40
45
(3)
Maximum
Credit
(1) × (2)
7.65%
34
40
45
(4)
Credit Phase-Out for
AGI (or earned income
if greater) Over This
Amount
Married taxpayers filing joint returns
$15,290
26,260
26,260
26,260
$560
3,733
6,164
6,935
$ 7,320
10,980
3,733
15,410
6,164
15,410
6,935
Source: Internal Revenue Code. "Rev. Proc. 2020-45." www.irs.gov.
All taxpayers except married taxpayers filing joint returns
$ 560
(5)
Phase-Out
Percentage
$9,160
20,130
20,130
20,130
7.65%
15.98
21.06
21.06
15.30%
15.98
21.06
21.06
No Credit When AGI
(or earned income if
greater) Equals or
Exceeds This Amount
(4) + [(3)/(5)]
$22,610
49,622
55,529
59,187
$16,480
43,492
49,399
53,057](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F363cd58e-1b65-4b04-894b-f83cee0dcc92%2F9d473749-003f-4ef4-b82c-7d2288794d5c%2Ftjlktt_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(1)
Maximum Earned
Qualifying Income Eligible
Children
for Credit
0
1
2
3+
$ 7,320
10,980
15,410
15,410
0
1
2
3+
Credit %
7.65%
34
40
45
(3)
Maximum
Credit
(1) × (2)
7.65%
34
40
45
(4)
Credit Phase-Out for
AGI (or earned income
if greater) Over This
Amount
Married taxpayers filing joint returns
$15,290
26,260
26,260
26,260
$560
3,733
6,164
6,935
$ 7,320
10,980
3,733
15,410
6,164
15,410
6,935
Source: Internal Revenue Code. "Rev. Proc. 2020-45." www.irs.gov.
All taxpayers except married taxpayers filing joint returns
$ 560
(5)
Phase-Out
Percentage
$9,160
20,130
20,130
20,130
7.65%
15.98
21.06
21.06
15.30%
15.98
21.06
21.06
No Credit When AGI
(or earned income if
greater) Equals or
Exceeds This Amount
(4) + [(3)/(5)]
$22,610
49,622
55,529
59,187
$16,480
43,492
49,399
53,057
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