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Jenny and Rob are married; they have one child, Rhiannon, who is 4 years old. The couple works full-time; Jenny earns $62,000 per year while Rob earns $44,000 per year. They pay Rob's mother, Aileen, $150 per week to care for Rhiannon.

What statement is true?

A. Only Jenny can deduct the childcare expenses from her taxable income.
B. Only Rob can deduct the childcare expenses from his taxable income.
C. Jenny and Rob can choose who will deduct the childcare expenses from their income.
D. Neither Jenny, nor Rob, can deduct the childcare expenses because the money was paid to a non-arms' length person.

Answer :

The correct statement is Neither Jenny, nor Rob, can deduct the childcare expenses because the money was paid to a non-arms' length person.(D)

In order to deduct childcare expenses from taxable income, the expenses must be paid to a licensed caregiver or a daycare facility. In this case, the money was paid to Rob's mother, Aileen, who is not considered an arms' length person.

Therefore, Jenny and Rob cannot deduct the childcare expenses from their taxable income. The fact that they both work full-time and have a child does not change the requirement for the expenses to be paid to an arms' length person for the deduction to be allowed.

To know more about taxable income click on below link:

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