Clark, a widower, maintains a household for himself and his two dependent preschool children. For the year ended December 31, 2016, Clark earned a salary of $32,000. He paid $3,600 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2016. How much can Clark claim as a child and dependent care credit in 2016?

Question

Quizplus · Accepted Answer

Clark can claim a child and dependent care credit equal to 35% of his qualifying expenses up to $3,000 for one dependent and $6,000 for two or more dependents. In this case, Clark's qualifying expenses are $5,100 ($3,600+$1,500) for two dependents. Therefore, Clark can claim a credit equal to 35% of $5,100, which is $1,785. However, the credit is limited to the amount of Clark's earned income, which is $32,000. Therefore, Clark can claim a child and dependent care credit of $1,326 ($1,785 limited to $32,000 earned income). The correct answer choice is C.

Clark, a Widower, Maintains a Household for Himself and His