Effective 2019, the Personal Exemption Allowance was eliminated. In the same year, the Child Tax Credit...

 

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Effective 2019, the Personal Exemption Allowance was eliminated. In the same year, the Child Tax Credit doubled from $1,000 to $2,000 per child. The Personal Exemption Allowance 2was $4,150 for each exemption. So, a family of 4 (2 adults and 2 children) could claim an exemption of $16,600. If the 2 children are under 17, the family loses the exemption (deduction) but recognizes an additional $2,000 in tax credits. Assume a Personal Exemption Allowance of $4,150 per individual. Assume a 22% marginal tax rate. Q: What is the net tax benefit for every child under 17? Q: How many children under the age of 17 will create a break-even tax responsibility? Q: Assume a family of 4, with 2 children under 17. What marginal tax rate creates a break-even result? What does this mean? Q: Did this change in the tax law reduce or increase taxes for most families? Таx Taxable income Tax owed rate bracket 10% $0 to $19,750 10% of taxable income $1,975 plus 12% of the amount over $19,750 $9,235 plus 22% of the amount over $80,250 $29,211 plus 24% of the amount over $171,050 $66,543 plus 32% of the amount over $326,600 $94,735 plus 35% of the amount over $414,700 $167,307.50 plus 37% of the amount over $622,050 12% $19,751 to $80,250 $80,251 to $171,050 $171,051 to $326,600 $326,601 to $414,700 $414,701 to $622,050 22% 24% 32% 35% 37% $622,051 or more Effective 2019, the Personal Exemption Allowance was eliminated. In the same year, the Child Tax Credit doubled from $1,000 to $2,000 per child. The Personal Exemption Allowance 2was $4,150 for each exemption. So, a family of 4 (2 adults and 2 children) could claim an exemption of $16,600. If the 2 children are under 17, the family loses the exemption (deduction) but recognizes an additional $2,000 in tax credits. Assume a Personal Exemption Allowance of $4,150 per individual. Assume a 22% marginal tax rate. Q: What is the net tax benefit for every child under 17? Q: How many children under the age of 17 will create a break-even tax responsibility? Q: Assume a family of 4, with 2 children under 17. What marginal tax rate creates a break-even result? What does this mean? Q: Did this change in the tax law reduce or increase taxes for most families? Таx Taxable income Tax owed rate bracket 10% $0 to $19,750 10% of taxable income $1,975 plus 12% of the amount over $19,750 $9,235 plus 22% of the amount over $80,250 $29,211 plus 24% of the amount over $171,050 $66,543 plus 32% of the amount over $326,600 $94,735 plus 35% of the amount over $414,700 $167,307.50 plus 37% of the amount over $622,050 12% $19,751 to $80,250 $80,251 to $171,050 $171,051 to $326,600 $326,601 to $414,700 $414,701 to $622,050 22% 24% 32% 35% 37% $622,051 or more

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