Question

Gabe and Dana are married and file jointly. For 2019, Gabe earned $150,000 and Dana earned $20,000 working part time as a party planner.   They have two young children, a 4-year old son, Mike, and a 6-year old daughter, Chrissy.    In order to work, they paid the following for day care to have their children watched and cared for:

Best Beginning Day Care	$4,000
Bay Child Care & Housekeeping	2,000
Mrs. Goetz (Dana's mother)	1,000

​How much was their child and dependent care tax credit for 2019?

Answer 1

Sollution

To qualify child care benefit, both spouses must have earned income:

As per IRS the Child and Dependent Care Credit can get you 20% to 35% of up to $3,000 of child care and similar costs for a child under 13 and the maximum credit amount is $6000 for two or more children under age 13.

The eligible cost will be lesser of actual costs or $6000 for 2 or more children.

A family will be allowed a 20% of dependent child care credit (total earnings more than $43,000)

Therefore = $6000*20% = $1200