Question

1.

In 2020, Elaine paid $2,440 of tuition and $1,160 for books for her dependent son to attend State University this past fall as a freshman. Elaine files a joint return with her husband.

What is the maximum American opportunity tax credit that Elaine can claim for the tuition payment and books in each of the following alternative situations? (Leave no answer blank. Enter zero if applicable.)

Elaine’s AGI is $88,000.

What is the American opportunity tax credit?

2. In 2020, Laureen is currently single. She paid $2,400 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,400 each for a total of $4,800). Sheri and Meri qualify as Laureen’s dependents. Laureen also paid $1,750 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University. Finally, Laureen paid $1,250 for herself to attend seminars at a community college to help her improve her job skills. (Leave no answer blank. Enter zero if applicable.)

a. What is the maximum amount of education credits Laureen can claim for these expenditures? Laureen's AGI is $45,000. If Laureen claims education credits for her three children and herself, how much credit is she allowed to claim in total? If she claims education credits for her children, how much of her children’s tuition costs that do not generate credits may she deduct as for AGI expenses?

-American opportunity tax credit? _______

Lifetime learning credit?_______

For AGI deduction?_______

3.In 2020, Laureen is currently single. She paid $2,400 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,400 each for a total of $4,800). Sheri and Meri qualify as Laureen’s dependents. Laureen also paid $1,750 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University. Finally, Laureen paid $1,250 for herself to attend seminars at a community college to help her improve her job skills.

b. Laureen’s AGI is $95,000. What is the maximum amount of education deductions Laureen can claim to the extent the costs don’t generate a credit?

For AGI deduction?_______

4.
In 2020, Laureen is currently single. She paid $2,400 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,400 each for a total of $4,800). Sheri and Meri qualify as Laureen’s dependents. Laureen also paid $1,750 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University. Finally, Laureen paid $1,250 for herself to attend seminars at a community college to help her improve her job skills. (Leave no answer blank. Enter zero if applicable.)

c. Laureen’s AGI is $45,000 and Laureen paid $12,100 (not $1,750) for Ryan to attend graduate school (i.e., his fifth year, not his junior year).

-American opportunity tax credit? _______

Lifetime learning credit?_______

5.This year Luke has calculated his gross tax liability at $2,240. Luke is entitled to a $3,060 nonrefundable personal tax credit, a $1,830 business tax credit, and a $820 refundable personal tax credit. In addition, Luke has had $2,850 of income taxes withheld from his salary. (Input the amount as a positive value.)

What is Luke’s net tax due or refund?

6.

In 2020, Zach is single with no dependents. He is not claimed as a dependent on another’s return. All of his income is from salary and he does not have any for AGI deductions.

What is his earned income credit in the following alternative scenarios? Use Exhibit 8-10. (Round your intermediate calculations to whole dollar amount. Round your final answer to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

d. Zach is 24 years old and his AGI is $4,100.

What is the earned income credit?_____

7.

Julie paid a day care center to watch her two-year-old son while she worked as a computer programmer for a local start-up company.

What amount of child and dependent care credit can Julie claim in each of the following alternative scenarios? Use Exhibit 8-9

a. Julie paid $2,180 to the day care center and her AGI is $50,000

What is the child & dependent care credit?___

Answer 1

	American opportunity tax credit is a credit for qualified educational expenses paid for an eligible student for first four years of his higher education
	Maximum annual credit of $ 2500 can be claimed per eligibile student
1	IN first case Elaines AGI is Rs 88000 and hence she will receive a reduced amount of credit as her AGI is above $ 80000 and $ 90000
	In case AGI below $ 80000
	AOTC	=100% of first Rs 2000 and 25% of next Rs 2000
		= 100% of 2000 + 25% of 1600
		2400
	In case AGI above $ 8000 upto $ 90000
	Partial tax credit	=(90000-88000)/10000
		=0.2
		=0.2*2400
		480
2	AOTC	=100% of first Rs 2000 and 25% of next Rs 2000
		=100% of 2000+25% of 400
		2100 for each child attaining higher eductaion
		=2100*2
		4200
		AITC cannot be claimed for child attaining junior school
	LLC	=20% of first 10000 on qualified education upto Rs 2000
		=20% of (2400+2400+1750)
		1310
		LC caanot be claimed for seminar fees as it is claimed for education expenses for student enrolment in undergraduate, graduate or professional degree courses
		AOTC	4200
3		Lauren's AGI is more than $ 95000 so she cannot claim any of AOTC and LLC
4		AGI	45000
		American opportunity tax credit is only for high school going students and not for graduate schhol students hence
		AOTC will be	4200
		LLC	= 20% of first 10000 on qualified expenses
			= 20% of (2400+2400+12100)
			=20% of 10000
			=2000
		Additionally Tuition and fees deduction for graduate students upto $4000 with AGI upto $ 65000
5		Gross tax liability	2240
		Non-refundable personal tax credit	3060
		Business credit	1830
		Refundable personal tax credit	820
		Total taxes	820
		Income tax withheld	2850
		Refund	3670
6		Earned income credit of childless workers with income below $14340 can get earned income credit
		But person needs t be atleast 25 for EITC without a qualifying child hence
		Zach's EITC will be 0
7		An amount equal to $3000 per depandant is available for day care expenses
		$ 2180 can be claimed in full