Joyce, a widow, lives in an apartment with her two minor children (ages 8 and 10), whom she supports. Joyce earns $33,000 during 2018. She uses the standard deduction.
a. Calculate the amount, if any, of Joyce's earned income credit.
b. During the year, Joyce is offered a new job that has greater future potential than her current job. If she accepts the job offer, her earnings for the year will be $39,000; however, she is afraid she will not qualify for as much of die earned income credit. Using after-tax cash-flow calculations, determine whether Joyce should accept the new job offer. As the child tax credit will be the same under either scenario, you can ignore it for purposes of this analysis.