Trudy is Jocelyn's friend. Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work. During the year, Jocelyn paid Trudy $4,000 to care for her son. What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $30,000? (Exhibit 8-9 in the text)

Question

Quizplus · Accepted Answer

The child and dependent care credit is calculated based on a percentage of the expenses paid for the care of a qualifying individual, which is capped at $3,000 for one child. With an AGI of $30,000, the applicable percentage is 27%. Therefore, the credit is 27% of $3,000, which equals $810.

Trudy Is Jocelyn's Friend