Clark,a widower,maintains a household for himself and his two dependent preschool children.For the year ended December 31,2017,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 2017.How much can Clark claim as a child and dependent care credit in 2017?

Question

Quizplus · Accepted Answer

Clark can claim a credit equal to the smaller of his earned income ($32,000) or the total he paid for childcare ($3,600 + $1,500 = $5,100) up to a maximum of $3,000 for one child or $6,000 for two or more children. Since Clark has two children, he can claim up to $6,000. Therefore, the amount Clark can claim as a child and dependent care credit is $5,100 (the total he paid for childcare) minus $1,500 (the maximum credit for one child) plus $1,326 (20% of the remaining expenses after the credit for one child has been subtracted). Thus, the amount Clark can claim is $4,926, which is closest to choice C, $1,326.

Clark,a Widower,maintains a Household for Himself and His Two Dependent