Kaelyn's mother, Judy, looks after Kaelyn's four-year-old twins so Kaelyn can go to work (she drops off and picks up the twins from Judy's home every day). Since Judy is a relative, Kaelyn made sure, for tax purposes, to pay her mother the going rate for child care ($6,300 for the year). What is the amount of Kaelyn's child and dependent care credit if her AGI for the year was $36,000? (Exhibit 8-9)

Question

Quizplus · Accepted Answer

Judy is not a dependent relative of Kaelyn, so the expenditures are qualified up to $6,000 (for two qualifying persons). The applicable percentage is 24%. So, the allowable credit is $1,440 ($6,000 × 24%).

Kaelyn's Mother, Judy, Looks After Kaelyn's Four-Year-Old Twins So Kaelyn