Kobe is a single dad with two dependent children, Lizzie, age 7 and Leslie, age 3. He has AGI of $51,000 and paid $6,300 to a qualified day care center. What amount of credit can Kobe receive for the child and dependent care credit?
1200
3,700
To determine the amount of credit Kobe can receive for the child and dependent care credit, we need to consider the guidelines and calculations for this credit. Here's how you can calculate it step by step:
1. Determine the allowable expenses: The child and dependent care credit allows for a percentage of qualified expenses paid for the care of qualifying individuals. In this case, Kobe paid $6,300 to a qualified day care center, which is considered an allowable expense.
2. Identify the qualifying individuals: For this credit, qualifying individuals are children under the age of 13 who are dependents and require care to allow the taxpayer to work or look for work. In this case, both Lizzie (age 7) and Leslie (age 3) qualify as dependents and require care.
3. Determine the applicable percentage: The percentage of allowable expenses that can be claimed as a credit is based on the taxpayer's adjusted gross income (AGI) and ranges from 20% to 35%. The credit gradually decreases as the AGI increases.
In this scenario, Kobe's AGI is $51,000, but we need to know the exact amount to determine the applicable percentage. Assuming a single filing status, let's consider the applicable percentages based on the ranges:
- If AGI is less than $15,000, the applicable percentage is 35%.
- If AGI is between $15,000 and $43,000, the applicable percentage gradually decreases from 35% to 20%.
- If AGI is above $43,000, the applicable percentage is 20%.
Since Kobe's AGI is $51,000, the applicable percentage is 20%.
4. Calculate the credit: To calculate the credit, we multiply the applicable percentage by the allowable expenses. In this case, the calculation would be:
$6,300 (allowable expenses) × 0.20 (applicable percentage) = $1,260.
Therefore, Kobe can receive a child and dependent care credit amounting to $1,260 based on the given information.