Warren and Erika paid $9,300 in qualified expenses for their son, Cash, to attend the University...

Warren and Erika paid $9,300 in qualified expenses for their son, Cash, to attend the University of Washington. Cash is in his first year of college and attended full-time. How much is Warren and Erik's American opportunity tax credit, without regard to any AGI limitation?

Expert Solution

Ans : The American opportunity tax credit is a credit for qualified education expenses paid for an eligible student for the first 4 years of higher education. You can get maximum annual credit of $ 2,500 per eligible student. The tax credit is based on upto $ 4,000 in eligible higher education expenses, equal to 100% of the first $ 2,000 in eligible expenses and 25% of 2nd $ 2,000. If the credit brings the amount of tax we owe to zero, you can have 40% of any remaining amount of the credit refunded to you.

In order to claim full American tax / college tax credit, married filing jointly modified adjusted gross income should be or should have been between $ 1,60,000 - $ 1,80,000. Single tax filing and head of the household or qualified widower with dependent child annual income between $ 80,000 - $ 90,000. Married taxpayers who file separate income tax returns are not eligible.

Warren and Erika paid $ 9,300 in qualified expenses for their son. They can get maximum annual credit of $ 2,500 for their son.

ekkarill92 answered 2 months ago

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