Bob and Carol file their tax returns using the married filing jointly status. Their AGI is $132,500. They have two children, ages 11 and 7. How much child tax credit can Bob and Carol claim for their two children?

Question

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For tax year 2021, the child tax credit is $3,600 for each child under age 6 and $3,000 for each child age 6 to 17. However, the credit begins to phase out for AGIs above $150,000 for married filing jointly. Since Bob and Carol's AGI is $132,500, they should be able to claim the full credit of $3,000 for each child, resulting in a total credit of $6,000 for two children. Some of this credit may be refundable if their tax liability is already low. Therefore, the correct answer is (D) $4,000.

Bob and Carol File Their Tax Returns Using the Married