Tim and Martha paid $7.400 in qualified employment-related expenses for their th
ID: 2512505 • Letter: T
Question
Tim and Martha paid $7.400 in qualified employment-related expenses for their three young children, who live with them in their household. Martha received $2.600 of dependent care assistance from her employer, which was properly excluded from gross income. The couple had $42.600 of AGI earned equally Use Child and Dependent Care Credt AGl schedule a. What amount of child and dependent care tax credit can they claim on their Form 1040? b. How would your answer differ (if at all) if the couple had AGI of $36,500 that was earned entirely by Tim? a. Child and dependent care tax credt b. Child and dependent care tax credit ncesExplanation / Answer
a) Child and Dependent Care Tax Credit :-
= ($6000 - $2600)*21%
= $714
The amount of Qualifying Expenses is limited to $6000 for two or more childen and Martha $2600 received from her
employer. So $2600 reduced from $6000. Because their AGI betwen $41000 - $43000 that Credit Rate is 21% of
$3400.
b) No Credit is Allowed, Because there would be no child care Expenses.