Question

Julie paid a day care center to watch her two-year-old son while she worked as a computer programmer for a local start-up company.

What amount of child and dependent care credit can Julie claim in each of the following alternative scenarios? Exhibit 8-9

a. Julie paid $2,400 to the day care center and her AGI is $50,000 (all salary).

b. Julie paid $6,000 to the day care center and her AGI is $50,000 (all salary).

c. Julie paid $5,000 to the day care center and her AGI is $25,000 (all salary).

d. Julie paid $2,400 to the day care center and her AGI is $14,000 (all salary).

e. Julie paid $5,000 to the day care center and her AGI is $14,000 ($2,400 salary and $11,600 unearned income).

Answer 1

A)

Description	amount	explanation
1)Dependent care expenditures	2400
2) limit on qualifying expenditures for one dependent	3000
3)Julie’s earned income	50000
4)Expenditures eligible for credit	2400	least of 1,2 or 3
5)Credit percentage rate	20%	AGI over $43000
6)Child and dependent care credit	$480	4×5

B)

Description	amount	explanation
1)dependent care ex.	6000
2)limit on qualifying Expenditure on one dependent	3000
3)julie's earned income	50000
4)expenditure eligible for crdit	3000	least of 1,2 or 3
5)credit percentage rate	20%	AGI OVER $43000
6)child and dependent care credit	$600	4×5

C)

Decription	amount	explanation
1)same as above	5000
2)	3000
3)	25000
4)	3000	least of 1,2 or 3
5)	30%	AGI not over $25000
6)	900	4×5

D)

Description	amount	explanation
1) same as above	2400
2)	3000
3)	14000
4)	2400	least of 1,2 or 3
5)	35%	AGI not.over $15000
6)	$840	4×5