Question

# Clarita is a single taxpayer with two dependent children, ages 10 and 12. Clarita pays \$3,000...

Clarita is a single taxpayer with two dependent children, ages 10 and 12. Clarita pays \$3,000 in qualified child care expenses during the year.

TABLE 6.1 CHILD AND DEPENDENT CARE CREDIT PERCENTAGES
 Adjusted Gross Income Applicable Percentage Over But Not Over \$0 – \$15,000 35% 15,000 – 17,000 34% 17,000 – 19,000 33% 19,000 – 21,000 32% 21,000 – 23,000 31% 23,000 – 25,000 30% 25,000 – 27,000 29% 27,000 – 29,000 28% 29,000 – 31,000 27% 31,000 – 33,000 26% 33,000 – 35,000 25% 35,000 – 37,000 24% 37,000 – 39,000 23% 39,000 – 41,000 22% 41,000 – 43,000 21% 43,000 – No limit 20%

If her adjusted gross income (all from wages) for the year is \$18,500, calculate Clarita's child and dependent care credit for 2018.
\$_______________

Amswer = \$990

Explanation:

Since both children are aged under 13 years, therefore, maximum qualifying expense is \$6000.

Since expense of \$3000 is under the maximum qualifying expense, therefore, full \$3000 is qualifying expense for the child and dependent care tax credit. From table 6.1, for income of \$18500, percentage to determine the child and dependent care credit is 33%.

Hence Child and dependent care credit is 3000*33% =\$990.

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