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.
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Harry and Wilma may claim a credit for child and dependent care expenses of:

Quizplus · Accepted Answer

To determine the credit for child and dependent care expenses, we need to follow a few steps:

1. Determine the lower of the earned income of Harry and Wilma ($20,000 in this case) or the total childcare expenses ($9,600).
2. Multiply the lower of the two amounts by 20%. This gives us the maximum amount of credit which can be claimed.

In this case, the lower of the earned income and childcare expenses is $9,600. So, the maximum credit amount is:

$9,600 x 20% = $1,920

However, the credit is subject to a maximum limit based on the number of dependents. In this case, Harry and Wilma have 2 dependents, so the maximum limit is $1,200.

Therefore, the credit which can be claimed is $1,200.

Harry and Wilma Are Married and File a Joint Income