Bud and Stella are married, file a joint return, and have one child, age 3. Their combined AGI is $35,000. Bud and Stella incur $3,500 of child care expenses during the current year. The child and dependent care credit is ___________.

A) $600.
B) $700.
C) $750.
D) $875.


C) $750.

($35,000 AGI - $15,000)/$2,000 = 10 percentage point reduction from the 35% maximum rate. $3,000 (limit for one child) × 25% (rate from table on page I:14-12) = $750

Business

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