(a) Mr. and Mrs. Smith have one nine-year-old son. Both parents work out of the home. Mr. Smith's earned income for 2018 was $45,000 and Mrs. Smith's earned income was $35,000. During 2018, Mrs. Smith was off work for a period of 3 weeks with a severe cold. Total child care expenses for 2018 were $2,600.

Required: Indicate the appropriate tax treatment. State if the amount should be added to TOTAL INCOME, deducted in arriving at NET INCOME for tax purposes or deducted in arriving at TAXABLE INCOME and any additional tax implications if applicable. Indicate the amount of the inclusion or deduction in your answers.