Class $16$ In$-$Class Problems

Problem $1$: Child and dependent care tax credits

Jim and Mary are married and have two dependent children under the age of $13.$ Both parents are gainfully

employed and earn salaries in $2024$ as follows: $$16,000($Jim$)$ and $$5,200($Mary$).$ They have no other

income and no deductions for AGI.

To care for their children while they work, Jim and Mary pay Eleanor $($Jim$$s mother$)$ $$5,600.$ Eleanor does

not qualify as a dependent of Jim and Mary. Jim and Mary filed a joint federal income tax return. Compute

their credit for child and dependent care expenses in $2024.$

Problem $2$: Child and Dependent Tax Credit

In $2024,$ Santiago and Amy are married and file a joint tax return. They have three dependent children, ages

$12,14,$ and $19.$ All parties are U$.$S$.$ citizens. The couple$$s AGI is $$100,000($which is all from salaries, the

have no deductions for AGI$)$ and tax liability is $2,500.$ They made no additional payments during the year.

Determine the couple's net tax due $($refunded$).$

Problem $3$: Foreign Tax Credit

Paul invests in a company based in France and receives an ordinary dividend in the amount of $$10,000$

during $2024.$ As a result of this dividend, he is obligated to pay French taxes of $$2,000.$ However, he is

also entitled to a refund of $$100$ when he files his French Tax Return in $2024.$ Assume his marginal U$.$S$.$

tax rate is $15\%$ and his worldwide taxable income is also $$10,000.$

What is the allowed foreign tax credit for $2024?$

Problem $4$: Determine net tax due $($refunded$)$

In $2024$ your clients Jaime $(45$ years old$)$ and Cece $(36)$ Hollister have an AGI of $$80,000$ and income tax

liability of $$1,000.$ In addition, their household includes their $13-$year$-$old son Jeff who is a full$-$time

student, and Jaime$$s $75-$year$-$old widowed father Ty$,$ who qualifies as their dependent.

Finally, Cece spent $$2,000$ on tuition as she went back to school to train as an herbologist.

Required: What is the net tax due $($refunded$)$ for the Hollisters in $2043?$ How would your answer change

if Jeff was $22$ and a full$-$time student? Hint: Look at the form $1040$ for the order you apply specific tax

credits.