Acc 401 Week 4 Assingment

Week 4 assignment tax credits

Chapter 9 problem 42

Tim and Martha paid $7,900 in qualified employment-related expenses for their 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 $57,000 of AGI earned equally by Tim and Martha. What amount of child and dependent care tax credit can they claim on their form 1040? How would your answer differ (if at all) if the couple had AGI of $36,000 that was earned entirely byTim ?

Answer The maximum amount of qualifying expenses is limited to $6,000 for two or more children. But, the amount should be reduced by the $1,800 that Martha received from her employer. So the total expenses are $4,200. Because their AGI was over $43,000, Tim and Martha are entitled to a credit equal to 20% of their expenses, or $840. ($4,200 x .20 = $840) If the couple had AGI of $36,000 earned only by Tim, the credit would be zero because there would be no child care expenses. Because Martha was not employed, no credit is allowed. Expenses which are allowed are limited to the smaller of the earned income of the taxpayer or the taxpayers spouse. Therefor Martha had zero income no credit is allowed.

Problem 49

Jeremy and Celeste paid the following for their daughter , Alyssa , to attend Umiversity of Colorado, during 2010. Alyssa was in her first year of college and state tend full-time:
Tuition and fees (for fall semester ) $1,950
Tuition and fees ( for spring semester ) $1,000
Book $600
Room and board $1,200
The spring semester at Unversity of Colorado begins in January. In addition to the above Alyssa's uncle Devin sent $800 as a payment to her tuition directly to the university. Jeremy and Celeste have modified AGI of $165,000 . What is the amount of qualifying expenses purpose of the