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Hi,
assume a family earns 150k and gets 0 tax return at the end of the year, with 2 kids.
How does adding a 3rd child change the tax return number given everything else is the same?
(i'm guessing not much, but...)
Is 150k gross or AGI? There is a exemption of 4k per person I believe and also possibly a credit but I added one to our tax return last year just to see the impact and it didn't change much going from 0 to 1
1) Is this income from one or two earners?
2) If from two, how much does each one make.
3) I second the previous question - is this gross or AGI?
You are phased out of child tax credit at MAGI of $110K if Married Filing Jointly, but if one spouse makes less than $55K than it's worth considering filing separately, as long as you don't lose other deductions.
You can always claim an exemption for this child, which is $4000 for 2015. But exemption is not credit, so how much you actually save depends on your tax rate, which, again, depends on other deductions you can take.
Child tax credit, if you are not phased out by income, is $1000 per kid, so it's a nice chunk of change. When coupled with $4000 exemption it can give you ~$1500 tax savings.
ETA: it won't save you nearly enough money to cover the expenses for one additional child, if that's what you are asking
1) Is this income from one or two earners?
2) If from two, how much does each one make.
3) I second the previous question - is this gross or AGI?
You are phased out of child tax credit at MAGI of $110K if Married Filing Jointly, but if one spouse makes less than $55K than it's worth considering filing separately, as long as you don't lose other deductions.
You can always claim an exemption for this child, which is $4000 for 2015. But exemption is not credit, so how much you actually save depends on your tax rate, which, again, depends on other deductions you can take.
Child tax credit, if you are not phased out by income, is $1000 per kid, so it's a nice chunk of change. When coupled with $4000 exemption it can give you ~$1500 tax savings.
ETA: it won't save you nearly enough money to cover the expenses for one additional child, if that's what you are asking
One earner. AGI was a little less than 120k.
so, as i thought, without the 'credit', it's a saving of only a few hundred bucks given our scenario.
One earner. AGI was a little less than 120k.
so, as i thought, without the 'credit', it's a saving of only a few hundred bucks given our scenario.
thanks.
Correct. Of course you could figure that out from a 5 minute look at your 1040. Not that I didn't enjoy answering your question, but I think it's a good exercise for anyone concerned with finances. Knowing how taxes work let's you make important decisions without consulting a professional. (And by important decision I don't necessarily mean having a child )
Correct. Of course you could figure that out from a 5 minute look at your 1040. Not that I didn't enjoy answering your question, but I think it's a good exercise for anyone concerned with finances. Knowing how taxes work let's you make important decisions without consulting a professional. (And by important decision I don't necessarily mean having a child )
thank you.
Quote:
Originally Posted by bg7
Don't forget you might enter AMT territory. Do you have a high state tax?
Don't forget you might enter AMT territory. Do you have a high state tax?
He currently doesn't have a mortgage so that would lower the deductions a bit but you are right that AMT can be a booger. I'm glad I don't have to deal with state income tax for multiple reasons
He currently doesn't have a mortgage so that would lower the deductions a bit but you are right that AMT can be a booger. I'm glad I don't have to deal with state income tax for multiple reasons
Mortgage interest and charitable donations are some of the only deductions allowed under AMT calculations. The deductions that are most likely to trip the AMT are property taxes, state/local income taxes, and personal exemptions (ie, lots of kids/dependents).
I do not think his household income is high enough to really be in AMT territory, unless he has enormous state tax and property tax rates.
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