Question

Clark, a widower, maintains a household for himself and his two dependent preschool children. For the year ended December 31, 2018, Clark earned a salary of $32,000. He paid $3,600 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2018. Before considering any limitation due to tax liability, how much can Clark claim as a child and dependent care credit in 2018?

Answer 1

Explanation:

$32,000-($3600+$1500) = $32,000- $5100= $26,900

.: Clark claims $26,900 as a child and dependent care credit in 2018.

Answer 2

$5,100

Explanation:

The Child and Dependent Care Credit maximum applicable deduction is $3,000 per child under 13, and up to $6,000 of expenses for two or more children.

Clark can deduct both the $3,600 paid to the housekeeper and the $1,500 paid to the kiddie play camp. His total child and dependent care credit = $3,600 + $1,500 = $5,100