Question

A taxpayer's employer paid 500 of a taxpayer's2,000 child care expenses for him. How will the employer's assistance affect the child-care credit?

Answer 1

The employer's assistance of $500 will reduce the total child-care expenses paid by the taxpayer to $1,500 and may impact the child-care credit that the taxpayer can claim.

Step-by-step explanation:

The employer's assistance will affect the child-care credit in the following way:

1. The total child-care expenses paid by the taxpayer, which is $2,000, will be reduced by the employer's payment of $500. So, the remaining child-care expenses that the taxpayer paid out of pocket will be $2,000 - $500 = $1,500.
2. The taxpayer can claim a child-care credit based on the actual out-of-pocket expenses. In this case, the credit will be calculated based on the $1,500 that the taxpayer paid. The exact amount of the credit will depend on the taxpayer's income and the applicable tax rules.

So, the employer's assistance will reduce the taxpayer's out-of-pocket child-care expenses and may affect the total child-care credit that the taxpayer can claim.