Question

Julie paid a day care center to watch her two-year-old son while she worked as a computer programmer for a local start-up company. What amount of child and dependent care credit can Julie claim in the following alternative scenarios? Exhibit 8-9

Julie paid $2,400 to the day care center and her AGI is $50,000 (all salary).

Answer 1

Julie cannot claim a child and dependent care credit because her AGI is outside the qualifying income range.

Step-by-step explanation:

Julie can claim a child and dependent care credit based on the amount she paid to the day care center and her AGI. The amount of the credit is calculated based on a percentage of her qualifying expenses. For AGIs below $15,000, the credit percentage is 35%. For AGIs between $15,000 and $43,000, the credit percentage gradually decreases from 35% to 20%. Since Julie's AGI is $50,000, she falls outside of the income range to qualify for the credit.