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

The child and dependent care credit is calculated based on expenses paid for the care of qualifying individuals (in this case, Kaelyn's twins) to allow the taxpayer (Kaelyn) to work. The maximum expense allowed for two or more qualifying individuals is $6,000. The credit rate for Kaelyn's AGI of $36,000 is 24%. Therefore, the credit is $6,000 (maximum expense) * 24% = $1,440.

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