 Here we are in our example form 1040 populated using LASERT tax software. You don't need tax software to follow along, but it's a great tool to run scenarios with. You can also get access to the form 1040 related forms and schedules at the IRS website, irs.gov, irs.gov. Starting point, we've got the single file or Mr. Anderson living in Beverly Hills 90210. We've got the 100,000 W2 income way over the threshold to be getting the earned income tax credit. But that's our starting point here. And then we will lower that number 12,950 standard deduction, getting us to the 87,050 taxable income page number two, calculated the tax 14774 15,000 withheld. And that gets us to the 226 of the bottom line back to page one. Now we're going to be saying that there's one child. So when we add the child to it, it's going to generally move our filing status from single to head of household. Let's do that first. Alright, so now filing status has moved to head of household. We've got the one child here. And we're going to say now the standard deduction has increased to the 1900 instead of the 12,950 for the single filer because we went to head of household. And then on the second page, we note that we have the child tax credit, but we don't have of course the earned income tax credit. Now if we have the one filer, then we want to think about this category, the max credit could be the 3733. And then there's a difference in like the way the curve would look for a single filer or non married and a married filer. So this would be the maximum and this is the this is the items or the AGI limit when it phases out to zero. But we also want to think about the curve as it goes up. Now the other thing to point out with this is the lower income side with these refundable credits also could result in situations more likely we're getting married could be a disincentive sometimes because then you could you could end up losing, you know, a fairly substantial credit, which is often a case when a child's involved. So it's kind of an interesting situation. Because you can you can question, well, does that what does that incentivize as well in terms of the tax code? Is that having an impact? Because usually getting married is a benefit from a tax perspective, if you're well off, or middle, you know, if you're but on the low end with these refundable tax credits, there could be incentives not to get married, which is kind of, you know, seems like not exactly what you would want. But that's kind of some of the problems when you have the the other issue, of course, is that this credit in particular is trying not to fall into the trap of is locking people into not being able to get work because they lose the credit. That's why you have that earned income component. But there's always seems to be some of these negative kind of consequences with some of these laws. But in any case, we'll take a look at that as well, let's bring the income down. And we're going to say, let's bring it down to let's just say like 4000 to start off with 4000 of income, I'm going to remove the federal tax just so I don't get confused, and we'll basically plot out the curve, and then we'll get into the married situation and possibly look at, you know, what would happen to two single people that then got married situation. Alright, so we've got first the the 4000, obviously, that's below the threshold now the 19 four, therefore no taxable income but still could have a benefit to file because of the earned income tax credit and the child tax credit, we're focused here on the earned income tax credit. So at 4000, let's just plot this out again. So we can get an idea 4000. The credit is at 13651365. And let's bring it on up to 8000, 8000. And just see what that does on the credit credit goes up to 2729. So let's put that there 2729 for 8000. And let's jump up to 15,000 just so we don't spend too much time on this. So 15,000. So now we're at the 3733. That's the peak. So 3733 at 15,000. That's the highest point of the credit. So now it's going to go back down again. So let's go to 20,000. And we'll say okay 20,000 3733. So it's staying at the peak 20,000 3733. Let's go to 25,000 25,000. That brings us up to 2951. So we got 2951 at 25,000. Hold on a second. K-posso 2951 25,000 2951. Okay 30,000 30,000 almost there to the maximum or till we phase out entirely 2152 2152 2152. I did it again. Dang it. 2152 30,000. Alright, go to 35,000. Got here. That's not what I wanted to do. 35,000. And then 1353. Okay, 1353 for 35,000. 40,000. 40,000 almost to the upper threshold to get anything. Obviously it's going down 554. So that's the 554 40,000. And then if we go anything above 43, so 44,000, let's say 43,492, it goes to zero. So let's say 44,000. It goes to zero. Now note that if you had combat pay, for example, that's pay that wouldn't be included in income, but you might be able to include it in wages. And you can see why that might be a benefit. I mean, you can include it possibly in income earned income for the calculation of the earned income tax credit, which you could see why would be beneficial possibly, because it could result in increased credit as the income basically goes up. Let's go ahead and plot this on a graph just so we can kind of get a visual of this will say plot it on a graph. Boom, something like that. And so now we can see you can kind of visualize what's happening. Your income is going up income on the x axis, the credit going up, it caps out at that 3733, which it stops out for a while and then it goes back down until your income goes back down to and you don't get any more credit. If we mirror that in. This is the instructions for the form 1040. We're looking at this column now. We're saying, okay, single filer. This is the income level one qualifying child. This is the amount of the credit as income goes up. So it's going up, up, up, and then it's going to cap out at some point. It's going over here. It's up, up, up, up, up, up. And then it's going up, up, up, up, up, up, up. And over here, up, up, up until it maxes out at the 3733. That's at the 10, 950. And then it stays at that flat level at the maximum for quite some time. So it's flattened out there until we get down to still going still going till we get down to the 20,200 about and then it goes back down. So that's going to be the curve that you can imagine in your mind. If we mirror what we did here, the 15,000 falls in there. And then it starts going back down 25,000. It should be at the 2951 at what was that 25,000 25,000, which is down here to 25,2951. Right. And then it goes to the 30,000 2152 30,000 30,000 is a is 2152 and so on.