Question 1

A taxpayer has 2 qualifying children (under age 17). Their tax liability before credits is 0. Their earned income is ,000. What is the amount of the Child Tax Credit they can claim as a REFUND (Additional Child Tax Credit)? (Assume current tax year rules, max refundable approx ,700 per child).

Accepted Answer

Refundable CTC (ACTC) = Lesser of: 1. Unused credit, 2. Refundable Cap (e.g., 1,700/child), 3. 15% * (Earned Income - 2,500).

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Ignoring the per-child refundable cap or the ,500 floor.

A taxpayer has 2 qualifying children (under age 17). Their tax liability before credits is 0. Their earned income is ,000. What is the amount of the Child Tax Credit they can claim as a REFUND (Additional Child Tax Credit)? (Assume current tax year rules, max refundable approx ,700 per child).

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