Dependent Care Tax Benefits: Ethical Issues in Taxation

24 Pages Posted: 3 Jan 2010

See all articles by Sheldon R. Smith

Sheldon R. Smith

Utah Valley University - Department of Accounting

Lynn R. Smith

affiliation not provided to SSRN

Katherine D. Black

Utah Valley University

Date Written: 2009

Abstract

This paper, expanding on prior work, illustrates how some taxpayers are better off claiming the dependent care credit than the exclusion and some are better off claiming the exclusion. However, taxpayers likely do not know in advance which is better for them. The paper also shows how some taxpayers may actually be worse off participating in an employer sponsored plan and claiming the exclusion versus simply paying the costs directly without attempting to claim any tax benefit. Since low-income taxpayers, the ones most likely affected by these anomalies, may be unaware of the potential problems, even after a choice is made, the paper also discusses the ethical and public policy issues involved in creating this type of potential problem through the legislative process.

Keywords: tax, credits

JEL Classification: ethical problems

Suggested Citation

Smith, Sheldon R. and Smith, Lynn R. and Black, Katherine D., Dependent Care Tax Benefits: Ethical Issues in Taxation (2009). Journal of Accounting, Ethics and Public Policy, Vol. 10, No. 1, 2009, Available at SSRN: https://ssrn.com/abstract=1530180

Sheldon R. Smith

Utah Valley University - Department of Accounting ( email )

800 West University Parkway
Orem, UT 84058
United States
801-863-6153 (Phone)
801-863-8060 (Fax)

Lynn R. Smith

affiliation not provided to SSRN ( email )

Katherine D. Black (Contact Author)

Utah Valley University ( email )

800 West University Parkway
Orem, UT 84058-5999
United States

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