Question

In 2019, Zach is single with no dependents. He is not claimed as a dependent on another's return. All of his income is from salary and he does not have any for AGI deductions. What is his earned income credit in the following alternative scenarios? Use Exhibit 8-10: (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.) a. Zach is 29 years old and his AGI is $5,300. Earned income credit b. Zach is 29 years old and his AGI is $9,600. Earned income credit c. Zach is 29 years old and his AGI is $17,700. Earned income credit d. Zach is 24 years old and his AGI is $5,300. Earned income credit

EXHIBIT 8-10 2019 Earned Income Credit Table

Qualifying Children	(1) Maximum Earned Income Eligible for Credit	(2) Credit %	(3) Maximum Credit (1) × (2)	(4) Credit Phase- Out for AGI (or earned income if greater) Over This Amount	(5) Phase-Out Percentage	No Credit When AGI (or earned income if greater) Equals or Exceeds This Amount (4) + [(3)/(5)]
Married taxpayers filing joint returns
0	$ 6,920	7.65%	$ 529	$14,450	7.65%	$21,370
1	10,370	34	3,526	24,820	15.98	46,884
2	14,570	40	5,828	24,820	21.06	52,493
3+	14,570	45	6,557	24,820	21.06	55,952
All taxpayers except married taxpayers filing joint returns
0	$ 6,920	7.65%	$ 529	$ 8,650	7.65%	$15,570
1	10,370	34	3,526	19,030	15.98	41,094
2	14,570	40	5,828	19,030	21.06	46,703
3+	14,570	45	6,557	19,030	21.06	50,162

Answer 1

Part A

Description	Amount	Explanation
(1) Earned Income	5300
(2) Maximum earned income eligible for earned income credit for taxpayers filing as singe with no qualifying children	6920
(3) Earned income eligible for credit	5300	Lesser of (1) and (2)
(4) Earned income credit percentage	7.65%	Single taxpayer with no qualifying children
(5) Earned income credit before phase-out	405	(3) × (4)
(6) Phase-out threshold begins at this level of AGI (or earned income if greater)	8650
(7) AGI (or earned income if greater) in excess of phase—out threshold	0	$5300 AGI – (6), limited to $0
(8) Phase-out percentage	7.65%
(9) Credit phase-out amount	0	(7) × (8)
Earned income credit after phase-out	405	(5) + (9)

Part B

Description	Amount	Explanation
(1) Earned Income	9600
(2) Maximum earned income eligible for earned income credit for taxpayers filing as singe with no qualifying children	6920
(3) Earned income eligible for credit	6920	Lesser of (1) and (2)
(4) Earned income credit percentage	7.65%	Single taxpayer with no qualifying children
(5) Earned income credit before phase-out	529	(3) × (4)
(6) Phase-out threshold begins at this level of AGI (or earned income if greater)	8650
(7) AGI (or earned income if greater) in excess of phase—out threshold	950	$9600 AGI – (6), limited to $0
(8) Phase-out percentage	7.65%
(9) Credit phase-out amount	(73)	(7) × (8)
Earned income credit after phase-out	$456	(5) + (9)

Part C

Description	Amount	Explanation
(1) Earned Income	17700
(2) Maximum earned income eligible for earned income credit for taxpayers filing as singe with no qualifying children	6920
(3) Earned income eligible for credit	6920	Lesser of (1) and (2)
(4) Earned income credit percentage	7.65%	Single taxpayer with no qualifying children
(5) Earned income credit before phase-out	529	(3) × (4)
(6) Phase-out threshold begins at this level of AGI (or earned income if greater)	8650
(7) AGI (or earned income if greater) in excess of phase—out threshold	9050	$17700 AGI – (6), limited to $0
(8) Phase-out percentage	7.65%
(9) Credit phase-out amount	(529)	(7) × (8) = $692, limited to (5)
Earned income credit after phase-out	$0	(5) + (9)

Part D

In case of D, as Zach is 24 years old that is less than 25 years and also he has no child, he is not eligible for earned income credit. So, in this case earned income credit is $0