Ashby and Curtis, a young professional couple, have atwo-year-old son, Jason. Cu

Question

Ashby and Curtis, a young professional couple, have atwo-year-old son, Jason. Curtis works full-time as an electricalengineer, but Ashby has not worked outside the home since Jason wasborn. As Jason is getting older, Ashby feels that he would benefitfrom attending nursery school several times a week, which wouldgive her an opportunity to reinvigorate her love of painting at anearby art studio. Ashby thinks if she is lucky, the proceeds fromthe sale of her paintings will pay for the nursery school tuition.But, in addition, she is planning to claim the credit for child anddependent care expenses because the care provided Jason at thenursery school is required for her to pursue her art. Can Ashby andCurtis claim the credit for child and dependent care expenses forthe nursery school expenditure?

need atleast one page solution. thanks!!!

Explanation / Answer

Yes, Ashby and Curtis can claim credit for child and dependent care for the expenditure in nursery school. Following conditions are satisfied:

1) The child shoudd be younger than 13 years in this case child is 2 years old.

2) Than both the parents must be working or looking for work/ So Curtis is working full time and Ashby is looking for work which is near her place in the artgallery.

3) The cost of preshool, after and before care,cost of day care etc can be allowed as credit: So nursery school expenditure is allowed as credit.

4) The credit amount allowed is maximum upto $3000 for one child. Now it also depends on how much you spend for school, no. of children and your adjusted gross total income.So there are different slabs with different % of qualified expenses allowed.Suppose yor family income is less than $15000 than 35% of qualifying expenses is allowed . This % decreases with the increase in income. Like if yor family AGI is more than $43000 20% of qualifying expenses is allowed.

5)  it is important that you must earn from doing some work, earning from investment is not counted. Ashby after looking for job will earn and spent that amount in paying fees.

5) To claim the credit they have to file Form 2441 along with their income tax return.

So if we see the above points Ashby is planning to put their child in nursery school so that she can work and she wants to spent her earnings towards payment of fees of nursery school and than both of them will be working. anSo as all the conditions are satisfied so they can claim child and dependent care expenses.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.