When you have completed this chapter, you should understand the following learning objectives: Apply the tax rules and calculate the credit for child and dependent care expenses, apply the tax rules and calculate the credit for the elderly or the disabled, apply the tax rules and calculate the education credits,. | Chapter 9 Tax Credits “We have a tax code that favors those with the best accountants.” — Shane Keats 1 Chapter 9 - Tax credits LO #1: Credit for Child and Dependent Care Expenses Credit is available for working taxpayers with dependent care expenses. Qualifying expenses include those paid for household services and expenses paid for qualifying individuals so that the taxpayer can be gainfully employed. 9-2 Credit for child and dependent care expenses: this credit is available for working taxpayers with dependent care expenses (of qualifying individuals). Qualifying expenses include those paid for household services and expenses for qualified individuals so that the taxpayer can be gainfully employed. 2 LO #1: Credit for Child and Dependent Care Expenses A qualifying individual includes: (1) a person under the age of 13 for whom the taxpayer is entitled to a dependency deduction or, (2) a dependent or spouse of the taxpayer who is incapable of caring for himself or herself. 9-3 A qualifying individual includes (1) a person under the age of 13 for whom the taxpayer is entitled to a dependency deduction or (2) a dependent or spouse of the taxpayer who is incapable of caring for himself or herself and lived with the taxpayer for at least half of the year. 3 LO #1: Credit for Child and Dependent Care Expenses The credit is calculated as a percentage of the qualifying expenses incurred to care for dependents. Percentage between 20%–35% is used in the calculation, depending on taxpayer’s AGI. The amount of expenses that can be used for the calculation is limited to $3,000 for one qualifying individual and $6,000 for two or more qualifying individuals . 9-4 The credit is based on the amount of qualifying expenses incurred multiplied by a percentage. The percentage ranges from 20% to a maximum of 35% and is dependent on the taxpayer’s AGI. The amount of qualifying expenses is also limited to $3,000 for one child and $6,000 for two or more children. 4 LO #1: Credit for . | Chapter 9 Tax Credits “We have a tax code that favors those with the best accountants.” — Shane Keats 1 Chapter 9 - Tax credits LO #1: Credit for Child and Dependent Care Expenses Credit is available for working taxpayers with dependent care expenses. Qualifying expenses include those paid for household services and expenses paid for qualifying individuals so that the taxpayer can be gainfully employed. 9-2 Credit for child and dependent care expenses: this credit is available for working taxpayers with dependent care expenses (of qualifying individuals). Qualifying expenses include those paid for household services and expenses for qualified individuals so that the taxpayer can be gainfully employed. 2 LO #1: Credit for Child and Dependent Care Expenses A qualifying individual includes: (1) a person under the age of 13 for whom the taxpayer is entitled to a dependency deduction or, (2) a dependent or spouse of the taxpayer who is incapable of caring for himself or herself. 9-3 A .
