Earned Income Credit For each of the following situations co

Earned Income Credit. For each of the following situations, compute the taxpayer\'s 2016 earned income credit.

a. Patty and Ron Barnett file a joint return, claiming their two sons, ages 3 and 5, as dependents. The Barnetts\' AGI is $14,400, which consists entirely of Ron\'s wages.

b. Joseph is a 25-year-old graduate student. His gross income consists of $5,000 of wages, and $80 in interest from a savings account. Joseph files as single and claims no dependents.

c. Suzanne and Vernon Zimmerman file a joint return, claiming their 6-year-old daughter as a dependent. The Zimmermans\' AGI consists of Vernon\'s $26,375 in wages, and $400 in dividend income.

d. Sarah files as head of household, claiming her 2-year-old son as a dependent. Sarah\'s AGI consists of $18,000 in wages and $3,520 in interest income.

Solution

a) Earned Tax credit if income is less than $44,648 with two qualifying children is equal to $5,572.

b) Earned Tax credit if income is less than $14,880 with no qualifying children is equal to $506.

c) Earned Tax credit if income is less than $44,648 with one qualifying children is equal to $3,373.

d) Sarah is not eligible for any Earned income credit since the interest income exceeds $3400 in a annual year.