Question

Education Tax Credits (LO 7.5)

Assuming Janie's parents have AGI of $163,400, what is the American Opportunity tax credit they can claim for Janie?

Answer 1

Answer expenses spent is so if we more than qualified & 4ooo Maximum American Oppurtunit tax credit (100% of (25% of first $2000 of second $2000 qualified expenses spent te of qualified expenses spent). C$2000 x1007 ) + ( $2000 x 257) $ 2500 (available in spent as more qualified expenses than $4ooo) and for point return filers, the above menti- on tax credit begins to phase out when AG crosses & 160000 and this tax credit will become zero when AG reaches $180000. Now coming to the adjusted Gross The givenquestion, income (AGI) - $ 163 400 » $ 163,400 The actual qualified expense = $13225 Sind the actual qualified expenses $13225 is more than $ 4ooo the tax credit = $2,500 (max amount) spent ie American

AGI parents is more than since Jain's $ 160,000 is Phased available tax credit ($2500) , the out partially. Phas ed out $163400-$160000 amount = $2500 $ 180000 - $160000 - $2500 $3400 20000 $0.17 = = $ 3500 x $425 As per the rules Note: $160000 AG at which tax credit begins to be phased out P 180000 AG credit at which tax equals zero. - American oppurtunity tax credit > 92,500 - $495 $ 2500 - $425 - 2075