Maurice and Judy (both age 32) have one natural daughter, age 4, and adopted twin boys, age 8. Their adjusted gross income on their joint return is $410,000. If they take the standard deduction, what is their tax liability after any allowable tax credits in 2018 if the child tax credit begins to phase out at $400,000?

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The standard deduction for married filing jointly in 2018 is $24,400. Their taxable income is $410,000 - $24,400 = $385,600. The child tax credit is $2,000 per qualifying child, and they have three qualifying children. However, the child tax credit begins to phase out at $400,000, and their taxable income is above that threshold. The phase-out rate is 5% for every $1,000 of taxable income above $400,000. Their taxable income is $35,600 above $400,000, so their child tax credit is reduced by $35,600 x 5% = $1,780. Their total child tax credit is $2,000 x 3 - $1,780 = $4,220. Their tax liability is $81,399.

Maurice and Judy (Both Age 32) Have One Natural Daughter