Question

Brendan and Theresa are married and have three children in college. Their twin daughters, Christine and Katlyn, are freshmen and attend the same university. Their son, Kevin, is a graduate student. In 2019, Brendan and Theresa pay $11,860 in tuition and fees ($5,930 each) and $2,740 in textbooks ($1,430 and $1,310, respectively) for their daughters and $4,130 in tuition and fees for Kevin and $480 in textbooks. The twins' room and board is $2,640, while Kevin's room and board is $1,410. Brendan and Theresa have an adjusted gross income of $77,300.

a. Brendan and Theresa can claim $______ as a tax credit for the higher education expenses.

Round intermediate computations and final answer to the nearest dollar.

b. Assume that their adjusted gross income is $123,600, then they can claim $_____ as a tax credit for the higher education expenses.

c. Assume the same facts as in part a, except that Kevin is a freshman and the twins are graduate students. Brendan and Theresa can claim $______ as a tax credit for the higher education expenses.

Answer 1

Page No - 1 Tax Credit: The Credit provided by fare law that reduce the Income fare liability of a tare payer are referred to as fare Credits. La) Compute the amount of fare Credit B and I would claim I of thely adjusted Gross Income is $77300 5 Although American Opportonity Tax Credil [AOTc] provides far credit for tution fees and course materials (textbooks) Brendan And Theinga can claim a maximum of $2500 for each of their twin daughters christine and katlyn. Christine and katlyn qualify for AOTC because they are freshmen an college and their qualified higher Education Lupenses exceed $ 4000 limit. -> lifelione learning Tax Credit (LLTC) provides tax Credit for credil. Enly tution and related fees. Brendan - and Thorea claim a manimum of $886 ($ 410 karol) for their son katlyn

Prgo lo.2 Therefore. Band I can claim a total of 8 256x2) & taas] because the adjusted gross income of B and T is less than the lower phase out of 1160000 feit claiming HotC and less than lower phase out of $ 110000 for claiming UTC. Compote the amount of fore Credit B and I would claim, if their adjusted gross income is $123600) Skep-1:- Compule elic tom Credit percenloge Raine Credit percenlose Ndjusted gross income-lowry phase out ligher phase oul - lower phase cut $193600 - $110000 x100 $147200 - $110000 $19.4. Sho-2 : Compute hare Credit allowed for their sonk. Tax Credil allowed sk's tuition fees x Okduction percentage)x? ZG - Tau credit percentage) . It u30 Xâ1) x (1-11-1). $670

Page 3 skp-3: Compute total tam Credits total fan Credit CATC credit for daughter ALLTC credit 1 1 - ($9500x2 daughters) +8670 = $5670 ) Compute the amount of tax credit B and I would claim, if thely adjusted gross income ts $77300; and thear son, k is freshman and twin daughters are graduate students - Since AOTC provides tan credit for tution fees & Course materials . B and I can claim mau stom of $2500 for their son, k. because k qualifies for norc as he is freshman in college and his qualified higher education Eupenses Exceed $4000 limit - Since daughters are not freshmen in the college there are not eligible for Astc. but are eligible for UTC So, B and T could claim Lite tare Credit of

Page - 4 $2000 ($10.000 x 20.1.) because they would claim only 2001. of qualified Expenses to a maximum of $10.000. - Therefore B and T can claim a tobal Busod fasco +62000] because and adjusted gross income of B and I is less than the lower phase out of $160000 for clarming AotC and less than the lower phase out of 110.000 for claining Clic end