Susan pays $4,700 for daycare for her dependent mother who had a stroke last year.What is her dependent care credit if her AGI is $40,100 if the phaseout begins at $15,000?

Question

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The dependent care credit for expenses paid for the care of a qualifying individual is calculated based on a percentage of the expenses that decreases as the taxpayer's adjusted gross income (AGI) increases. The maximum credit percentage is 35%, which gradually decreases to 20% for taxpayers with an AGI over $43,000. Since Susan's AGI is $40,100, which is below the threshold where the minimum percentage applies, her credit percentage is higher than 20% but less than 35%. The phaseout begins at $15,000, and her AGI is $40,100, which means her credit percentage is reduced as her income increases. However, without the specific phaseout rate or formula provided in the question, we typically use the minimum credit percentage for incomes above the phaseout start but below the lowest credit percentage threshold. Assuming the minimum applicable percentage after phaseout considerations (which is not explicitly given but is implied to be above the 20% minimum for those with AGIs above $43,000), and knowing the maximum expense eligible for the credit is $3,000 for one dependent, the exact percentage cannot be directly calculated from the information given. However, given the options, we select the one that is a plausible amount for a credit given the expense and AGI information, acknowledging that the specific calculation requires more detailed tax code information. The correct choice, based on typical calculations and the provided options, would be an estimate or selection closest to what one might expect for a credit amount in this scenario, which is $660, acknowledging that in real scenarios, the exact figure would depend on the precise application of the tax code's phaseout rates and percentages.

Susan Pays $4,700 for Daycare for Her Dependent Mother Who