Question

In 2018, 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 credit that Elaine can claim for the tuition payment and books in each of the following alternative situations?

a. Elaine’s AGI is $83,000.

b. Elaine’s AGI is $170,500.

c. Elaine's AGI is 205,500

Answer 1

A) AGI is $83000

AOC = $2390

Description	amount	explanation
1) AOC before phase out	$2390	2000×100% + (3560-2000)×25%
2)AGI	$83000
3) phase out threshold	$160000
4) excess AGI	$0	[(2)-(3) but not <0 and not >20000]
5)phase out range for taxpayer filing as married filing jointly	$20000	$180000-$160000
6)phase out percentage	0%	(4)/(5) or 100% max
7) phase out amount	$0	1 × 6
AOC after phase out	$2390

B) AGI is $170500

AOC = $1135

Description	amount	explanation
1) AOC before phase out	$2390	2,000×100% + (3,560 – 2,000) × 25%
2) AGI	$170500
3) Phase out threshold	$160000
4) excess AGI	$10500	[(2)–(3) but not <0 and not >$20,000}
5)phase out range for taxpayer filing as marrie filing jointly	$20000	$180000-$160000
6) phase out percentage	52.5%	(4) / (5) or 100% max
7) phase out amount	$1255	1 × 6
8) AOC after phase out	$1135

C) AGI is $205500

AOC = $0

Description	amount	explanation
1) AOC before phase out	$2390	2,000×100% + (3,560 – 2,000) × 25%
2) AGI	$205500
3) phase out threshold	$160000
4)excess AGI	$45500	(2) – (3) {but not <0 and limited to a maximum of $20,000}
5)Phase-out range for taxpayer filing as married filing jointly	$20000	$180000-$160000
6) phase out percentage	100%	(4) / (5) or 100% max
7) phase out amount	$2390
AOC after phase out	$0