Kylie is a single mom with two dependent children, Tanner, age 7 and Olivia, age 11. She has AGI of $38,000 and paid $5,300 to a qualified day care center for the two children. What amount of credit can Kylie receive for the child and dependent care credit?

Question

Quizplus · Accepted Answer

Kylie can receive a credit equal to 35% of the expenses paid for child care, up to a maximum of $3,000 for one qualifying individual (Olivia in this case) and $6,000 for two or more qualifying individuals (Olivia and Tanner). In this case, Kylie paid $5,300 in expenses for two qualifying individuals, so she can receive a credit of 35% x $5,300 = $1,855. However, the credit is limited to the amount of her earned income (AGI in this case), so she can only claim a credit of $38,000 x 0.20 = $7,600. Since the credit cannot exceed the smaller of the amount of qualifying expenses or her earned income limitation, Kylie can claim a credit of $1,855.

Kylie Is a Single Mom with Two Dependent Children, Tanner