Question

john and anna, who are married with modified AGI $150,000, are sending their daughter to her first year of college. their total tuition and related payments during the year amounted to $12,000. In addition, their daughter received a $10,000 scholarship to cover tuition. they have not taken advantage of any other type of tax benefit related to educational expenses. whate is the amount of their American Opportunity Tax credit?

Answer 1

Answer :

American opportunity tax credit calculation on tuition fees of collage after deducting the tax fee scholarship received toward fees

American opportunity tax credit maximum is $2500 ,100 % upto 2000 and 25% on more than 2000 but maximum credit is $2500.

Total tuition fee is paid 12000

Less : Scholarship received 10000

Amount available for tax credit is 2000

Hence John and Anna can claim $2000 as American opportunity tax credit

Note : Assume the collage is qualified institution for claiming credit