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In: Accounting

In 2019, Elaine paid $2,640 of tuition and $920 for books for her dependent son to...

In 2019, Elaine paid $2,640 of tuition and $920 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.)

a. Elaine’s AGI is $83,000.

b. His AGI is $423,600.

c. His AGI is $427,700, and his daughters are ages 10 and 12.

Solutions

Expert Solution

a. Elaine's AGI is $83,000
Elaine may claim an American opportunity credit (AOC) of $2,390
Description Amount Explanation
$
(1) AOC before phase out           2,390 2000*100%+(3560-2000)*25%
(2) AGI        83,000
(3) Phase out threshold     1,60,000
(4) Excess AGI                  -   (2)-(3) {but not <0 and limited to a maximum of $20,000}
(5) Phase out range for taxpayer filing as married filing jointly        20,000 180,000-160,000
(6) Phase out percentage 0% (4)/(5) or 100% max
(7) Phase out amount                  -   (1)*(6)
AOC after phase out           2,390 (1)-(7)
b. His AGI is $423,600
Because his AGI exceeds the threshold amount of , Elaine may not claim an AOC.
Description Amount Explanation
$
(1) AOC before phase out           2,390 2000*100%+(3560-2000)*25%
(2) AGI     4,23,600
(3) Phase out threshold     1,60,000
(4) Excess AGI        20,000 (2)-(3) {but not <0 and limited to a maximum of $20,000}
(5) Phase out range for taxpayer filing as married filing jointly        20,000 180,000-160,000
(6) Phase out percentage 100% (4)/(5) or 100% max
(7) Phase out amount           2,390 (1)*(6)
c. His AGI is $427,700 and his daughters are ages 10 and 12
Because his AGI exceeds the threshold amount of , Elaine may not claim an AOC.
Description Amount Explanation
$
(1) AOC before phase out           2,390 2000*100%+(3560-2000)*25%
(2) AGI     4,27,700
(3) Phase out threshold     1,60,000
(4) Excess AGI        20,000 (2)-(3) {but not <0 and limited to a maximum of $20,000}
(5) Phase out range for taxpayer filing as married filing jointly        20,000 180,000-160,000
(6) Phase out percentage 100% (4)/(5) or 100% max
(7) Phase out amount           2,390 (1)*(6)

ekkarill92 answered 2 years ago
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