Tim and Martha paid $17,900 in qualified employment-related expenses for their three young children who live with them in their household. Martha received $1,800 of dependent care assistance from her employer, which was properly excluded from gross income. The couple had $156,500 of AGI earned equally. 

Required:

a. What amount of child and dependent care tax credit can they claim on their Form 1040? 

 

b. How would your answer differ (if at all) if the couple had AGI of $136,500 that was earned entirely by Martha?

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Child and Dependent Care Credit AGI schedule Adjusted Applicable Gross Income Percentage $125,000 or less $125,001- 127,000 $127,001- 129,000 $129,001- 131,000 $131,001- 133,000 $133,001- 135,000 $135,001- 137,000 $137,001- 139,000 $139,001- 141,000 $141,001- 143,000 $143,001- 145,000 $145,001- 147,000 $147,001- 149,000 $149.001- 151,000 $151,001- 153,000 $153.001- 155,000 $155,001- 157,000 50% 49% 48% 47% 46% 45% 44% 43% 42% 41% 40% 39% 38% 37% 36% 35% 34% Adjusted Applicable Gross Income Percentage $157,001- 159,000 $159,001- 161,000 $161,001- 163,000 $163,001- 165,000 $165,001- 167,000 $167,001- 169,000 $169,001- 171,000 $171,001- 173,000 $173,001- 175,000 $175,001- 177,000 $177,001- 179,000 $179,001- 181,000 $181,001- 183,000 $183,001- 400,000 $400,001- 402,000 $402.001- 404,000 $404,001- 406,000 33% 32% 31% 30% 29% 28% 27% 26% 25% 24% 23% 22% 21% 20% 19% 18% 17% Adjusted Applicable Gross Income Percentage $406.001- 408,000 $408,001- 410,000 $410,001- 412,000 $412,001- 414,000 $414,001- 416,000 $416,001- 418,000 $418.001- 420,000 $420,001- 422,000 $422,001- 424,000 $424,001- 426,000 $426,001- 428,000 $428,001- 430,000 $430,001- 432,000 $432,001- 434,000 $434,001- 436,000 $436,001- 438,000 $438,001 or more 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%