Cheryl is single, has one child (age 6), and files as head of household during 2012.Her salary for the year is $19,000.She qualifies for an earned income credit of the following amount:
A)$0.
B)$305.
C)$2,864.
D)$3,169.
E)None of the above.

Question

Quizplus · Accepted Answer

To calculate the earned income credit, we need to determine Cheryl's earned income. This is her salary for the year, $19,000.

Next, we need to determine the maximum credit she can receive. This is based on the number of qualifying children she has. For one qualifying child, the maximum credit for 2012 is $3,169.

Finally, we need to determine Cheryl's actual credit, based on her earned income. The earned income credit is a refundable credit, which means that if the credit is more than the taxes owed, the taxpayer will receive a refund for the difference.

To calculate the credit, we use the Earned Income Credit table in the Form 1040 instructions for 2012. Based on her earned income of $19,000 and one qualifying child, Cheryl's credit is $2,864. Therefore, the best answer is C.

Cheryl Is Single, Has One Child (Age 6), and Files