Question

Kevin and Sue have three children, ages 6, 8 and 14. They spend $8,000 this year on eligible employment-related expenses for the care of their children after school. Kevin earned a salary of $20,000 and Sue earned a salary of $18,000. They plan on filing a joint tax return. What is the amount of the credit for child and dependent care expenses? $690. $713. $1,380. $1,840. $0.

Answer 1

solution :
given
Kevin and Sue have three children, ages 6, 8 and 14.
They spend $8,000 this year on eligible employment-related expenses for the care of their children after school.
also given that
Kevin earned a salary of $20,000 and Sue earned a salary of $18,000.
amount of the credit for child and dependent care expenses:
percentage of child care credit = 35% (for earnings upto 15000) - 23000/2000 (for amount over 15000)
= 35% - 11.5%
= 23.5% or 23%

therefore, the couple qualifies for a credit of 23% on the total expenses for children below 13 years.

hence the amount of childcare expenses = 8000/3 = 2667

Hence child care credit = 2667*23%
= $613