Question

Problem 6-20 (Algorithmic) Education Tax Credits (LO 6.5) Janie graduates from high school in 2017 and enrolls in college in the fall. Her parents (who file a joint return) pay $8,475 for her tuition and fees. If required, round your computations to the nearest whole value.

a. Assuming Janie's parents have AGI of $177,000, what is the American Opportunity tax credit they can claim for Janie? $

b. Assuming Janie's parents have AGI of $70,800, what is the American Opportunity tax credit they can claim for Janie? $

Answer 1

a.American oppurtunity tax credit is available only when AGI is more than $80,000but i case of married filing joint return it is $ 160,000 .Maximum amt claim under AOTC is $2500 i.e, American oppurtunity tax credit is 100% of expenses towards tutuion fee and 25% of expenses of next $2000. In this Adjusted gross total income of Janie's parents exceeded $ 160,000.They are eligible to get american Oppurtuity tax credit amounting to $ 2500

b. As AGI is $ 70,800 which i s less tan $ 160,000 limit. In this case JAnie's parents cannot claim american opppurtunity tax credit.