Question

# Jon and Kate have 8 children. Their AGI is 200,000 and consists exclusively of earned income....

Jon and Kate have 8 children. Their AGI is 200,000 and consists exclusively of earned income. Both Jon and Kate earned \$100,000 each. They have \$50,000 in childcare expenses If all of their kids are younger than 13, what is the maximum dependent care credit?

Solution :

If your income is below \$15000 you will qualify for the full 35%.The percentage falls by 1% for every additional \$2000 of income until it reaches 20%.

The maximum amount of care expenses you are allowed to claim is \$3000 for one person or \$6000 for two or more person.

The children must below age of 13 and dependent.

so in this case, The income (AGI) is \$200000

So MAXIMUM dependent child care will 200000*20%

=\$40000

Child care expenses=\$50000

So, in this case, Jon and Kate have 8 children does not matter,the credit for care dependent is maximum of \$6000.

However allowed credit is \$6000,so the maximum dependent care credit is \$6000

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