Jeff and Geri are married and have AGI of $95,000 and three young children. Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands. Geri earns $5,000 teaching the yoga class. How much child and dependent care credit can Jeff and Geri claim? Why?
$1,000, or $5,000 × 20%. Geri's earned income of $5,000 is the maximum limit for day care expenses which can be used to calculate the credit. The credit is intended to help taxpayers who work at income-earning jobs.
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