A taxpayer has four children under the age of 17 and files head of household. Assuming eligibility tests are met and the taxpayer”s MAGI is $80,000, what is the maximum child tax credit that can be claimed (assuming sufficient tax liability)?
a. Incorrect. $1,000 is the limit for one qualifying child.
b. Incorrect. $1,500 is not the correct amount.
c. Correct. $3,750 is the result of four qualifying children at a maximum credit of $1,000 per child ($4,000), reduced by the taxpayer”s MAGI limit. The phase-out range for a taxpayer who files as head of household begins at $75,000. With a MAGI of $80,000, the child tax credit is reduced $50 for every $1,000 over $75,000. The disallowed amount is $50 × 5 = $250, and the credit allowed is $4,000 – $250 = $3,750.
d. Incorrect. The taxpayer could claim a child tax credit of $4,000 only if his MAGI was below the phase-out range.