Question

Janie graduates from high school in 2019 and enrolls in college in the fall. Her parents (who file a joint return) pay $10,850 for her tuition and fees.

If required, round your computations to the nearest whole value.

a. Assuming Janie's parents have AGI of $167,200, what is the American Opportunity tax credit they can claim for Janie?
$

b. Assuming Janie's parents have AGI of $66,880, what is the American Opportunity tax credit they can claim for Janie?
$

Answer 1

	a.) The american opportunity tax credit is $ 2,500 per eligible student. In case of married filling jointly to claim full credit the AGI should be equal to or less than $ 160,000 . The Phase out begans if AGI is above $160,000 but upto $ 180,000. If AGI exceeds $180,000 , no credit shall be allowed.
	As Janie's parents AGI exceeds $ 160,000. The phase out will be applicable.
	Phase out amount will be $ 900    ( 2,500 x (( 167,200 - 160,000)/ ( 180,000 - 160,000) )
	American Opportunity tax credit they can claim for Janie will be $ 1,600 ( 2,500 - 900 ).
b.)	As Janie's parents AGI is below $ 160,000, the full tax credit will be available.
	American Opportunity tax credit they can claim for Janie will be $ 2,500.