Question

In 2018, Laureen is currently single. She paid $2,600 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,600 each for a total of $5,200). Sheri and Meri qualify as Laureen’s dependents. Laureen also paid $1,850 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University. Finally, Laureen paid $1,350 for herself to attend seminars at a community college to help her improve her job skills. What is the maximum amount of education credits Laureen can claim for these expenditures in each of the following alternative scenarios?

1. Laureen’s AGI is $45,000 and Laureen paid $12,300 (not $1,850) for Ryan to attend graduate school (i.e, his fifth year, not his junior year).

American opportunity credit:

Lifetime Learning Credit:

Answer 1

American opportunity credit: $4300

Lifetime Learning Credit: $2000

Description	Amount	Explanation
(1) AOC before phase-out for Sheri and Meri	4300	[($2,000 × 100%) + ($600× 25%)] × 2 students
(2) AGI	$45000
(3) Phase-out threshold	80000
(4) Excess AGI	0	(2) – (3) {but not <0 and limited to a maximum of $10,000}
(5) Phase-out range for single taxpayer	10000	$90,000 – 80,000
(6) Phase-out percentage	0%	(4) / (5)
(7) Phase-out amount	0	(3) × (6)
(8) Total AOC after phase-out	4300	(1) – (7)
9) Lifetime learning credit before phase-out	2000	$270 ($1,350 × 20%) for herself and $2,460 ($12,300 × 20%) for Ryan.However, total limited to $2,000 ($10,000 × 20%)
(10) AGI	45000
(11) Phase-out threshold	54000
(12) Excess AGI	0	(10) – (11) {but not <0 and limited to a maximum of $10,000}
(13) Phase-out range for taxpayer filing as Single	10000	$64,000 – 54,000
(14) Phase-out percentage	0%	(12) / (13)
(15) Phase-out amount	0	(14) × (9)
(16) Lifetime learning credit after phase-out	2000	(9) – (15)
Total education credits	6300	(8) + (16)