Which of the Following Individuals or Couples Qualify for the Child

question 111

Multiple Choice

Which of the following individuals or couples qualify for the child and dependent-care credit?
I.Lois is single and earns $45,000 for the year. She pays $2,600 in child-care costs for her 8-year-old daughter.
II.Patrick and Carol are married and together they earn $67,000 ($42,000 and $25,000 respectively) . They pay $5,000 in child-care costs for their twin boys, age 11.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Passive Income

Earnings derived from a rental property, limited partnership, or other enterprises in which a person is not actively involved.

At-risk

Pertains to the amount of money invested in an activity that could be lost, used in tax contexts to limit deductions.

AMT Adjustment

A modification required under the Alternative Minimum Tax rules to convert regular taxable income into AMT taxable income.

AMT Depreciation

Depreciation methods under the Alternative Minimum Tax system, which can differ from regular tax depreciation in terms of rates and methods.