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15. Jessica and Robert have two young children. They have $7,000 of qualified child care expenses...

15. Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $22,000 in 2019. What is their allowable child and dependent care credit considering their pre-credit tax liability?

a.$0

b.$2,000

c.$7,000

d.$6,000

e.$1,860

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Answer #1
Rate of allowance of Tax credit
The percentage you use depends on your income. If your income is below $15,000, you will qualify for the full 35%.
The percentage falls by 1% for every additional $2,000 of income until it reaches 20%
AGI = 22000
Income Deduction %
$15,000 35%
$17,000 34%
$19,000 33%
$21,000 32%
$22,000 31%
Total qualified child care expense $6,000 (limited to $6000)
Deduction 1860 (6000*31%)

Hence correct answer is $1860 (d)

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