Question

Walt and deloris, who file a joint return, have two dependent children, bill and Tiffany. Bill is a freshman at state university, and Tiffany is working on her graduate degree. The couple pid qualified expenses of $2,000 for Bill (who is a half-time student) and $7,300 for Tiffany.

Walt and Deloris, who file a joint return, have two dependent children, Bill and Tiffany. Bill is a freshman at State University, and Tiffany is working on her graduate degree. The couple paid qualified expenses of $2,000 for Bill (who is a half-time student) and $7,300 for Tiffany Q. What education tax credits are available if Walt and Deloris report modified AGI of $124,300? b. What education tax credits are available if Walt and Deloris report modified AGI of $124,300 and Tiffany is taking one class a semester (is less than a half-time student) and not taking classes in a degree program? Complete this question by entering your answer in the tabs below. Required a Required b What education tax credits are available if Walt and Deloris report modified AGI of $124,3007 (Do not round Intermediate calculations. Round your final answers to the nearest whole dollar amount.) Dependent Bill Amount of Type of Credit Credit $ 2,000 (AOTC Lifetime learning credit $ 2.000 Tiffany Total Run Required b >

Answer 1

Answer -

Step - (1) - Information Given -

Walt and Deloris, who file a joint return, have two dependent children, Bill and Tiffany. Bill is a freshman at state university, and Tiffany is working on her graduate degree. The couple paid qualified expenses of $2000 for Bill (who is a half-time student) and $7300 for Tiffany.

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Step - (2) - Relevant Note for Educational Tax Credits -

Educational Tax Credits	Credit Phased-out Modified adjusted gross income (MAGI) Married, Filing Jointly	Maximum Credit limit
American Opportunity Credit (AOTC)	$160000 - $180000	100% on first $2000 of expenses on tuition & fees, 25% on next $2000 ----- Up to $2,500 per eligible student, per year
Lifetime Learning Credit (LLC)	$114000 - $134000	20% of expenses on tuition and fees ----- Up to $2000 per return

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Step - (3) - ( a ) - Calculation of Educational tax credits if Walt and Deloris report Modified AGI of $124300.

Bill is a freshman at state university, so he qualifies for the American Opportunity Credit.

Tiffany is working on her graduate degree, Since she is not in undergraduate, she does not qualify for the AOC. However, she does qualify for the Lifetime Learning Credit.

Lifetime Learning Credit = $7300 * 20% = $1460

Dependent	Type of credit	Calculations	Amount of credit
Bill	American Opportunity Credit (AOTC)	[ $2000 * 100% ]	$2000
Tiffany	Lifetime Learning Credit (LLC)	[($134000 - $124300) / ($134000 - $114000)] * $1460 [ Partial Lifetime Learning Credit ]	$970
Total			$2970

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Step - (4) - ( b ) - Calculation of Educational tax credits if Walt and Deloris report Modified AGI of $124300 and Tiffany is taking one class a semester (is less than a half-time student) and not taking classes in a degree program.

The MAGI and facts surround Bill did not change, therefore, the American Opportunity Credit (AOTC) of $2000 is still available for Bill.

Tiffany still qualifies for the Lifetime Learning Credit (LLC) , because, the LLC does not require the student to be pursuing a degree. Additionally, it only requires the student to be enrolled is at least one course.

Dependent	Type of credit	Calculations	Amount of credit
Bill	American Opportunity Credit (AOTC)	[ $2000 * 100% ]	$2000
Tiffany	Lifetime Learning Credit (LLC)	[($134000 - $124300) / ($134000 - $114000)] * $1460 [ Partial Lifetime Learning Credit ]	$970
Total			$2970