Sandra Maxwell is a full-time student and her husband,Joel,is employed,so they take their young son,Sam,to a child care center during the day.They qualify for a 25 percent dependent care tax credit,and they are in the 15 percent marginal tax bracket.If the annual cost of the child care is $6,200,how much will it save Sandra and Joel on their income taxes?

Question

Quizplus · Accepted Answer

To calculate the tax credit, we take the eligible expenses (in this case, $6,200) and multiply by the percentage for the credit (in this case, 25%). The result is $1,550. This tax credit will directly reduce the taxes owed by Sandra and Joel by $1,550, making it the best choice. Option A is incorrect as it represents the total cost of childcare, not the tax savings. Option C and D are both incorrect as they do not accurately calculate the tax credit.

Sandra Maxwell Is a Full-Time Student and Her Husband,Joel,is Employed,so