Harry and Wilma are married and file a joint income tax return.On their tax return,they report $44,000 of adjusted gross income ($20,000 salary earned by Harry and $24,000 salary earned by Wilma)and claim two exemptions for their dependent children.During the year,they pay the following amounts to care for their 4-year old son and 6-year old daughter while they work. Harry and Wilma may claim a credit for child and dependent care expenses of:

Question

Harry and Wilma are married and file a joint income tax return.On their tax return,they report $44,000 of adjusted gross income ($20,000 salary earned by Harry and $24,000 salary earned by Wilma)and claim two exemptions for their dependent children.During the year,they pay the following amounts to care for their 4-year old son and 6-year old daughter while they work.  Harry and Wilma may claim a credit for child and dependent care expenses of:

Quizplus · Accepted Answer

The child and dependent care credit is calculated as a percentage of the qualifying expenses, with a maximum credit of 35% of the expenses. In this case, the couple had qualifying expenses of $6,000 ($3,000 for each child) and can claim a maximum credit of 35% of that amount, or $2,100. However, the credit is limited by their earned income, so they can only claim up to $1,200 (which is 20% of their $6,000 of expenses). Therefore, the correct answer is choice C, $1,200.

Harry and Wilma Are Married and File a Joint Income