Question

If Janelle's adjusted gross income (AGI) was $33,500 and assuming that the daycare expenses are not changed and all else remains equal, how much would her Child and Dependent Care Credit be?

Answer 1

To calculate the Child and Dependent Care Credit for Janelle with an adjusted gross income (AGI) of $33,500, we need to consider a few key factors: the maximum allowable expenses, the percentage for the credit based on AGI, and whether she qualifies for the credit based on her situation.

1. **Maximum Allowable Expenses**: For the Child and Dependent Care Credit, the maximum allowable expenses are typically $3,000 per child for one child or $6,000 for two or more children.

2. **Percentage of Credit**: The percentage used to calculate the credit decreases with AGI. For those with an AGI of $15,000 to $43,000, the percentage is 20% to 35%. This percentage applies to the allowable expenses.

Since Janelle's AGI is $33,500, she falls within the range where the percentage for the credit is 20% to 35%. For an AGI of $33,500, we can use an approximate percentage of 20% to 25% for calculation purposes.

Assuming Janelle has one child and her daycare expenses are the maximum allowable expenses of $3,000, the calculation for the credit would be:

- If we use 20% (lower end of the estimated percentage):

\[
Child \& Dependent Care Credit = $3,000 \times 20\% = $600
\]

- If we use 25% (mid-range estimate):

\[
Child \& Dependent Care Credit = $3,000 \times 25\% = $750
\]

So, depending on the exact percentage applicable to her specific situation, Janelle's Child and Dependent Care Credit based on her adjusted gross income of $33,500 would likely be between **$600 and $750**. To determine the exact amount, it would be necessary to refer to the IRS guidelines or tables for the Child and Dependent Care Credit for the tax year in question.