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Paolo and Isadora Shaw are married, file a joint tax return, and have one dependent child,...

Paolo and Isadora Shaw are married, file a joint tax return, and have one dependent child, Dante. The Shaws report modified AGI of $141,350. The couple paid $8,070 of tuition and $9,105 for room and board for Dante, a fulltime first-year student at Serene College.

For 2017, Paola and Isidora may claim an American Opportunity Credit of $

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Answer:

The American Opportunity Tax Credit can provide some relief to the cost of college by providing taxpayers with a credit up to $2,500 per year per qualifying student. Proceeds from the credit can go towards tuition, enrollment fees, and course materials, etc.

The credit itself is calculated as the sum of, 100% of the first $2,000 of qualified education expenses paid for the eligible student plus an additional 25% of the next $2,000 (25% of $2,000 = $500) for a total maximum claim of $2,500 per student per year. Anyone who falls within the income guidelines and is paying $4,000 or more in educational expenses per year will be eligible for the full $2,500.

Calculation of claim an American Opportunity Credit

[(2000*100%) + (2000*25%)]                        = $2500

Since the couple paid $8070 for tuition fees, hence, they are eligible to claim for the full $2500 of American Opportunity Credit.

ekkarill92 answered 1 year ago
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