I:14-59 Earned Income Credit. Carolyn is unmarried and has one dependent child,
ID: 2765617 • Letter: I
Question
I:14-59
Earned Income Credit. Carolyn is unmarried and has one dependent child, age 6, who lives with her for the entire year. In 2015, she has income of $16,000 in wages and $6,000 in alimony. Her AGI is $22,000.
a. What is Carolyn’s tentative earned income credit (before phase out)?
b. what is Carolyn’s allowable earned income credit?
c. If Carolyn has no income tax liability (before the earned income credit is subtracted), is she entitled to a refund in the current year?
d. How will your answers to Part a and b change if Carolyn is married filing a joint return
Explanation / Answer
a. Carolyn's tentative earned income credit before the phase out is $2,040 (0.34 x $6,000). b. Carolyn can claim a credit of $1,922 ($2,040 - 0.1598 x [$13,000 AGI - $12,260). c. Yes, the earned income credit is refundable