Kaelyn's Mother, Judy, Looks After Kaelyn's Four-Year-Old Twins So Kaelyn

question 36

Multiple Choice

Kaelyn's mother, Judy, looks after Kaelyn's four-year-old twins so Kaelyn can go to work (she drops off and picks up the twins from Judy's home every day) . Since Judy is a relative, Kaelyn made sure, for tax purposes, to pay her mother the going rate for child care ($6,300 for the year) . What is the amount of Kaelyn's child and dependent care credit if her AGI for the year was $36,000? (Exhibit 8-9)

• A) $1,440
• B) $2,100
• C) $6,000
• D) $0

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Definitions:

Beneficiaries

Individuals or entities designated to receive assets from an estate, trust, account, or insurance policy upon the owner's death.

Annuity

An annuity is a financial product that pays out a fixed stream of payments to an individual, typically used as part of a retirement strategy.

Stream of Payments

A series of payments made over a period of time, typically referring to annuities, loans, or investments.

Pension Plan Distributions

Payments made from a pension plan to the beneficiary, retiree, or employee, which can be taxable or non-taxable depending on the plan type and contribution history.