a$.$ If Ava and Leo take advantage of the plan, they would $$ save income taxes because the reimbursement of child care expenses is excluded from $$ gross income. The income tax savings $$ associated with participating in the plan would be $$,1,200.$ In addition, Ava will save $$,383$ in FICA taxes due to the reduction in salary.

Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be $$1,160.$ Therefore, Ava and Leo's income taxes will be $$4$ higher $$ if they do not participate in the plan.

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The credit for child and dependent care expenses mitigates the inequity felt by working taxpayers who must pay for child care services to work outside the home. This credit is a specified percentage of expenses incurred to enable the taxpayer to work or to seek employment. The credit is claimed by completing and filing Form $2441($Credit for Child and Dependent Care Expenses$).$

b$.$ Assume, instead, Ava's salary was $$30,000$ and Ava and Leo's AGI is $$25,000$ and they are in the $10\%$ tax bracket.

The income tax savings $$ associated with participating in the plan would be $$.$ In addition, Ava will save $$383$ in FICA taxes due to the reduction in salary.

Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be $$1,740.$ Therefore, Ava and Leo's net taxes will be $$$ lower $$ if they do not participate in the plan.