During 2024, your friends, Tim and Shia, hired a child care provider (Rebecca) to come into their home while they are at work to care for their two children. Rebecca charges $4,500 for her services for the year. Tim and Shia have discovered that up to $6,000 of qualifying expenses will generate a credit for child and dependent care expenses and that qualifying expenses can include payments for housecleaning services. As a result, they ask Rebecca whether she would be interested in working several hours more per week, after Tim returns from work, for the sole purpose of cleaning the house. The couple offers to pay Rebecca $1,500 for the additional work. The net cost of the additional services would be only $1,200 [$1,500 - ($1,500 × 20%)] due to the availability of the credit for child and dependent care expenses. You learn of Tim and Shia's opportunity but think it is unfair. If you hired someone to perform similar housecleaning services at the same price, your net cost would be $1,500, not $1,200, because you do not qualify for the credit. You are troubled by this inequity. Is this the way the income tax law should work? Explain.
During 2024, your friends, Tim and Shia, hired a child care provider (Rebecca) to come into their home while they are at work to care for their two children. Rebecca charges $4,500 for her services for the year. Tim and Shia have discovered that up to $6,000 of qualifying expenses will generate a credit for child and dependent care expenses and that qualifying expenses can include payments for housecleaning services. As a result, they ask Rebecca whether she would be interested in working several hours more per week, after Tim returns from work, for the sole purpose of cleaning the house. The couple offers to pay Rebecca $1,500 for the additional work. The net cost of the additional services would be only $1,200 [$1,500 - ($1,500 × 20%)] due to the availability of the credit for child and dependent care expenses. You learn of Tim and Shia's opportunity but think it is unfair. If you hired someone to perform similar housecleaning services at the same price, your net cost would be $1,500, not $1,200, because you do not qualify for the credit. You are troubled by this inequity. Is this the way the income tax law should work? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![During 2024, your friends, Tim and Shia, hired a child care provider (Rebecca) to come
into their home while they are at work to care for their two children. Rebecca charges
$4,500 for her services for the year. Tim and Shia have discovered that up to $6,000 of
qualifying expenses will generate a credit for child and dependent care expenses and that
qualifying expenses can include payments for housecleaning services.
As a result, they ask Rebecca whether she would be interested in working several hours
more per week, after Tim returns from work, for the sole purpose of cleaning the house.
The couple offers to pay Rebecca $1,500 for the additional work. The net cost of the
additional services would be only $1,200 [$1,500 - ($1,500 × 20%)] due to the availability
of the credit for child and dependent care expenses.
You learn of Tim and Shia's opportunity but think it is unfair. If you hired someone to
perform similar housecleaning services at the same price, your net cost would be $1,500,
not $1,200, because you do not qualify for the credit. You are troubled by this inequity. Is
this the way the income tax law should work? Explain.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9fb5bc3-9e95-45f7-97ea-d7c020b9b3e8%2F5702f301-bdc7-484f-ac73-e169d1959e44%2Frbm8dhj_processed.png&w=3840&q=75)
Transcribed Image Text:During 2024, your friends, Tim and Shia, hired a child care provider (Rebecca) to come
into their home while they are at work to care for their two children. Rebecca charges
$4,500 for her services for the year. Tim and Shia have discovered that up to $6,000 of
qualifying expenses will generate a credit for child and dependent care expenses and that
qualifying expenses can include payments for housecleaning services.
As a result, they ask Rebecca whether she would be interested in working several hours
more per week, after Tim returns from work, for the sole purpose of cleaning the house.
The couple offers to pay Rebecca $1,500 for the additional work. The net cost of the
additional services would be only $1,200 [$1,500 - ($1,500 × 20%)] due to the availability
of the credit for child and dependent care expenses.
You learn of Tim and Shia's opportunity but think it is unfair. If you hired someone to
perform similar housecleaning services at the same price, your net cost would be $1,500,
not $1,200, because you do not qualify for the credit. You are troubled by this inequity. Is
this the way the income tax law should work? Explain.
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