Trisha Is Married and Has Young Children

Trisha is married and has young children. The couple is in the 37% tax bracket. In order for Trisha and her husband to work, they pay $5,000 for daycare which earns them a $1,000 dependent care credit. Trisha has been offered a new job. The new job will pay a $5,000 lower salary, but the new employer will offer $5,000 of paid child care. Trisha cannot claim the dependent care credit if she receives employer- paid child care. Which of the following statements is correct? (Ignore payroll taxes.)

A) Trisha will have $1,850 additional after- tax income if she accepts the new job.
B) Trisha will have $850 additional after- tax income if she accepts the new job.
C) Trisha will lose $3,150 of net value if she accepts the new job.
D) Trisha will lose $4,000 net value if she accepts the new job.