Walt and Deloris, who file a joint return, have two dependent children, Bill and
ID: 2564345 • Letter: W
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 paid qualified expenses of S2,200 for Bill (who is a halftime student) and S7,400 for Tiffany. a. What education tax credits are available if Walt and Deloris report modified AGI of $117,800? b. What education tax credits are available if Walt and Deloris report modified AGI of $117,800 and Tiffany is taking one class a semester (is less than a half-time student) and not taking classes in a degree program? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Complete this question by entering your answer in the tabs belovw Required a Required b What education tax credits are available if Walt and Deloris report modified AGI of $117,800? Dependent Amount of Type of Credit Credit Bill S 2,050 AOTC Tiffany Lifetime learning credit Total S 2,050Explanation / Answer
a) Find below the details tax credits available.
Dependent
Amounts of credit
Type of credit
Bill
$2,050
American opportunity tax credit (AOTA)
Tiffany
$2,000
Lifetime learning credit (LTC)
Total
$4,050
Notes to A:
For AOTA calculation - 1) 100% can be claimed on first $2,000 of qualifying expenses and thereafter 25% of remaining expenses paid during the year subject to maximum allowable credit is $2,500 per year up to 4 years.
2) Students must be pursuing degree and minimum student should be half time student.
b)
Dependent
Amounts of credit
Type of credit
Bill
$2,050
American opportunity tax credit
Tiffany
$2,000
Lifetime learning credit
Total
$4,050
Notes to B:
For LTC calculation - 1) Maximum of $2,000 credit is allowed and it can be allowable for unlimited number years.
2) It's not mandatory that student should not be pursuing degree.
Dependent
Amounts of credit
Type of credit
Bill
$2,050
American opportunity tax credit (AOTA)
Tiffany
$2,000
Lifetime learning credit (LTC)
Total
$4,050
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