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
| 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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