Earned Income Credit. Carolyn is unmarried and has one dependent child, age 6, w

Question

Earned Income Credit. Carolyn is unmarried and has one dependent child, age 6, who lived with her for the entire year. In 2017, 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 phaseout)? 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 Parts a and b change if Carolyn is married filing a joint return?

Explanation / Answer

A) The Earned income credit is allowed

For Tax Year 2017, the EITC phases out entirely (is not available) for taxpayers with an adjusted gross income of:

This credit can be claimed only when the return is filed jointly by wife and husband,as in this case they are separated no credit is avaliable for her.

B)Allowable earned income credit id zero.

C)No, if there is no question of income tax liability there is no case of earned income credit as it woukd give an indirect benifit for the party.

D) The answer remains the same as per the conditions given in part a, her gross adjusted income is $22000 and the limit below which the credit allowed in case jointly filed with one qualifying child is $39617

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