A single taxpayer is the custodial parent of two children under the age of 17, and she claimed the dependency exemption for both of them. Her wages are $48,000 and she has no other income. Her ex-spouse, the noncustodial parent, has earned income of $69,000. Neither parent claims a foreign earned income exclusion. Which parent can claim the child tax credit and for how much?
a. Incorrect. The parents do not split the credit between themselves unless each claims a dependency exemption for one of the children.
b. Correct. Because the custodial parent claims the dependency exemption for the children, this parent is eligible for the credit; based on the custodial parent”s income, the full credit ($1,000 × 2 qualifying children) is allowed.
c. Incorrect. The noncustodial parent cannot claim the child tax credit unless he or she is entitled to claim dependency exemptions for the qualifying children.
d. Incorrect. Children who are qualifying children of both parents do not bar the parent eligible for the dependency exemption from claiming the child tax credit (subject to income limits).