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 ($6,390 for the year). What is the amount of Kaelyn's child and dependent care credit if her AGI for the year was $36,900? (Exhibit 8-9)

Question

Quizplus · Accepted Answer

The child and dependent care credit is calculated based on a percentage of the qualifying expenses, which is capped at $3,000 per child (up to $6,000 for two or more children). With an AGI of $36,900, the applicable percentage is 24%. Therefore, the credit is 24% of $6,000, which is $1,440.

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