George is a single father who has 2 qualifying children.His AGI is $22,000.How much is his EIC (use the EIC formula)? (Round your answer to the nearest dollar. )
A)$3,400.
B)$4,633.
C)$4,845.
D)$5,616.

Question

Quizplus · Accepted Answer

To calculate the Earned Income Credit (EIC) for George, we need to use the EIC formula:

EIC = max(0, min(phaseout amount, credit amount))

where,

- phaseout amount = earned income x phaseout percentage 
- credit amount = number of qualifying children x credit rate

The phaseout percentages and credit rates are updated every year. For the tax year 2021, they are as follows:

- Phaseout percentages: 
   - 7.65% for taxpayers with no qualifying children
   - 15.98% for taxpayers with one qualifying child
   - 21.06% for taxpayers with two or more qualifying children

- Credit rates: 
   - $3,618 for taxpayers with one qualifying child
   - $5,980 for taxpayers with two or more qualifying children

Let's calculate George's EIC step by step:

- Phaseout amount: 
   - George has two qualifying children, so his phaseout percentage is 21.06%
   - Phaseout amount = $22,000 x 21.06% = $4,637.60

- Credit amount: 
   - George has two qualifying children, so his credit rate is $5,980

- EIC: 
   - EIC = max(0, min($4,637.60, $5,980)) = max(0, $4,637.60) = $4,845 (rounded to the nearest dollar)

Therefore, the answer is C) $4,845.

George Is a Single Father Who Has 2 Qualifying Children