Question

Mark is a single dad with two dependent children: Joey, age 7, and Sonny, age 3. He has an AGI of $39,000 and paid $4,300 to a qualified daycare center for the two children. What amount can Jamison receive for the child and dependent care credit?

Answer 1

Sol :

Given,

Single dad with 2 pendent children,

Joey, age 7, and Sonny, age 3.

AGI of $39,000 and paid $4,300 to a qualified daycare center for the two children.

Now amount to be receive for the child and dependent care credit as follows,

Qualification criteria for daycare credit as follows,

Child under the age of 13

Child age 13 or over, if physically or mentally unable to care for themself.

Dependent Care Credit limited is in range of 20% to 35%

Child and dependent care tax credit is 20% to 35% for daycare expenses up to $3,000 for one dependent or $6,000 for two or more dependents.

Tax payers whose gross income is below $15000 a year can claim 35% of their applicable care costs. The percentage falls by 1% for every additional $2000 of income until it reaches 20% for an adjusted gross income of $43000 or more.

Amount to be receive for the child and dependent care credit will be 35% of expense for adjusted gross income below $15,000 and percentage falls by 1% for every additional $2000 of adjusted gross income, as adjusted gross income is $39,000.

Eligible percentage = 35% - (39,000 - 15,000) / 2000 x 1% = 23%

Total expense = $4,300

Therefore the amount to be receive for the child and dependent care credit will be ($4,300 x  23%) = $989