Question

Problem 7-14 (Algorithmic)
Child and Dependent Care Credit (LO 7.3)

Marty and Jean are married and have 4-year-old twins. Jean is going to school full-time for 10 months of the year, and Marty earns $54,700. The twins are in day care so Jean can go to school while Marty is at work. The cost of day care is $9,600.

TABLE 6.1 CHILD AND DEPENDENT CARE CREDIT PERCENTAGES

Adjusted Gross Income				Applicable Percentage
Over		But Not Over
$0	–	$15,000		35%
15,000	–	17,000		34%
17,000	–	19,000		33%
19,000	–	21,000		32%
21,000	–	23,000		31%
23,000	–	25,000		30%
25,000	–	27,000		29%
27,000	–	29,000		28%
29,000	–	31,000		27%
31,000	–	33,000		26%
33,000	–	35,000		25%
35,000	–	37,000		24%
37,000	–	39,000		23%
39,000	–	41,000		22%
41,000	–	43,000		21%
43,000	–	No limit		20%

What is their child and dependent care credit?

Taxpayers are allowed two tax breaks for adoption expenses. They are allowed:

Qualified Expenses Paid personally

Paid by employer

a.

Exclusion Credit

b.

Exclusion Exclusion

c.

Credit Exclusion

d.

Credit Credit