Question

Miranda has two qualifying children for the child and dependent care credit, kailee (5) and alex (9). Miranda paid $13,000 for Kailee's care, but Alex stayed at a friend's house, so there were no expenses for him. assuming all other tests are met, how much expense can miranda use to calculate her credit?

O $3,000
O $6,000
O $8,000
O $16,000

Answer 1

Miranda can only use up to the maximum limit set by the IRS for the child and dependent care credit, which is $8,000 for two or more qualifying individuals. Despite spending $13,000 for Kailee's care, the credit calculation is capped at the maximum allowable amount.

Step-by-step explanation:

The student asks how much expense Miranda can use to calculate her child and dependent care credit, given that she has two qualifying children but only incurred child care expenses for one. The IRS sets a limit on the amount of child and dependent care expenses that can be applied toward the credit. For two or more qualifying individuals, the maximum amount of expenses one can claim in 2021 is $8,000. Since Miranda only paid for care for Kailee and no expenses were incurred for Alex, the total amount she can use to calculate her credit is limited to the amount she paid for Kailee, which is $13,000. However, this exceeds the IRS maximum limit; therefore, the correct option in her final answer for calculating her child and dependent care credit is $8,000.