Mary and John are married and have AGI of $100,000 and two young children. John...
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Accounting
Mary and John are married and have AGI of $100,000 and two young children. John doesn't work, and they pay $6,000 a year to day care providers so he can shop, clean, and read a little bit in peace.
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%
How much child and dependent care credit can Mary and John claim if they file a joint tax return?
$0$1,200$3,000$6,000
Why?
Because they are married taxpayers and choose to file a joint return.Because the expenses are limited to the lesser of either spouse's earned income.Because their AGI is too high.
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