Question

Janie graduates from high school in 2019 and enrolls in college in the fall. Her parents (who file a joint return) pay $14,350 for her tuition and fees. If required, round your computations to the nearest whole value. a. Assuming Janie's parents have AGI of $170,600, what is the American Opportunity tax credit they can claim for Janie? $ b. Assuming Janie's parents have AGI of $68,240, what is the American Opportunity tax credit they can claim for Janie? $

Martha and Lew are married taxpayers with $1,300 of foreign tax withholding from dividends in a mutual fund. They have enough foreign income from the mutual fund to claim the full $1,300 as a foreign tax credit. Their tax bracket is 15 percent and they itemize deductions.

Should they claim the foreign tax credit or a deduction for foreign taxes on their Schedule A?

If required, round your answer to the nearest dollar.

The foreign tax deduction will result in a $ tax benefit where as claiming the foreign tax credit yields a $ tax benefit. Therefore, the taxpayers should

Answer 1

A

• ANSWER:

Janie's parent have AGI of  $1,70,600 the credit they can claim for Janie is amount to $2,500 of the credit because Janie's parent's income is $1,70,600 and this level of income is higher than income level of $160,000.

Max credit is 2500

( 2.000 x 0.25 = 500 , 2000 + 500 =2500 )

B.

• ANSWER:

Janie's parent has AGI of $68,240 the credit they can claim for Janie is amount to $14,350 i.e.

whole of the amount paid for tuition and fees. Goes to credit because Janie's parent's income is $68,240 and this level of income is lower than income level of $80,000.

2.

• Lew and Martha claim the credit.

  If Lew and Martha deduct tax than Lew and Martha have a $195 as tax benefit ($1300 deduction*15% tax rate).

  If Lew and Martha claim the $1300 credit than Lew and Martha will have a full tax benefit of $1300

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