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? Required: Their AGI is $15,000, consisting of $12,000 of capital gains and $3,000 of wages. heir AGI is $15,000, consisting of $10,000 of lottery winnings (unearned income) and $5,000 of wages. Their AGI is $28,000, consisting of $23,000 of wages and $5,000 of lottery winnings (unearned income). Note: Round your intermediate calculations to the nearest whole dollar amount.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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?

Required:

  1. Their AGI is $15,000, consisting of $12,000 of capital gains and $3,000 of wages.
  2. heir AGI is $15,000, consisting of $10,000 of lottery winnings (unearned income) and $5,000 of wages.
  3. Their AGI is $28,000, consisting of $23,000 of wages and $5,000 of lottery winnings (unearned income).

    Note: Round your intermediate calculations to the nearest whole dollar amount.

(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
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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