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for 2018 Martin and Rachel are married and have a 3-year-old child. Martin is going to...

for 2018 Martin and Rachel are married and have a 3-year-old child. Martin is going to medical school full-time for 12 months of the year and Rachel earns $45,000. Their child is in day care so Martin can go to school while Rachel is at work. The cost of their day care is $10,000. What is their child and dependent care credit? Please show your calculations and explain.

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Answer #1

In the given question Martin and Rachel are married and one is earning income ($45,000) and another is in full time course for 12months which is more than 5months then IRS assigns to spouse $250 per month per child which is 250*12= $3,000.

Calculating the Credit available:

20%-35% of qualified expenses subject to maximum of $3,000 for one qualified person so in the year they have incurred expense of $10,000 so as maximum $3,000 is available as dependant credit .

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