Child and Dependent Care Credit Calculation for Cora

How much expense can Cora use to calculate her credit?

A. $3000

B. $6500

C. $8000

D. $13000

Answer:

The correct option is B. $6500.

Child and dependent care expenses qualify for the child and dependent care credit up to a certain limit. In this scenario, Cora has two qualifying children, Keri and Jason. Cora paid $13000 for Keri's care, but there were no expenses for Jason as he stayed at a friend's house.

Since there are two qualifying individuals, the limit for the child and dependent care credit is $6000. Therefore, Cora can only use $6000 of the $13000 paid for Keri's care to calculate her credit. The total amount she can use to calculate her credit is $6000.

However, Cora can use the full $13000 that she paid for Keri's care to calculate her flexible spending account (FSA) reimbursement for dependent care. The FSA is a separate tax-advantaged account that allows employees to set aside money on a pre-tax basis to pay for eligible dependent care expenses.

Therefore, the correct amount of expense that Cora can use to calculate her credit is $6500.