Question

Required information Skip to question [The following information applies to the questions displayed below.] In 2019, Laureen is currently single. She paid $2,500 of qualified tuition and related expenses for each of her twin daughters Sheri and Meri to attend State University as freshmen ($2,500 each for a total of $5,000). Sheri and Meri qualify as Laureen’s dependents. Laureen also paid $1,800 for her son Ryan’s (also Laureen’s dependent) tuition and related expenses to attend his junior year at State University. Finally, Laureen paid $1,300 for herself to attend seminars at a community college to help her improve her job skills. What is the maximum amount of education credits Laureen can claim for these expenditures in each of the following alternative scenarios? (Leave no answer blank. Enter zero if applicable.)

c. Laureen’s AGI is $45,000 and Laureen paid $12,200 (not $1,800) for Ryan to attend graduate school (i.e, his fifth year, not his junior year).

Answer 1

In the given problem, L has paid $2,500 each for her twin daughters as their qualified education expenses. Also, she has paid qualified education expenses of $1,800 for her son. Hence she can claim AOC as follows:

AOC = 2x {(100%x2000)+25%x500}+100%x1800

= 3925

L has also paid $1,300 for seminars, which will help to improve her job skills. For this she can claim lifetime learning credit as follows:

Lifetime learning credit= 20% of 1300

= $260

These credit amounts are before considering phase-out which is dependent on AGI of L.

c.

L has paid $12,200 (instead of $1,800) for her son’s graduation. Her AGI is $45,000.

In this case, the expense made for son will qualify as lifetime learning credit instead of AOC.

AOC = 2x{(100%x$2000)+(25%x$500)}

= 2x{2000+125}

=2x2125

= $ 4250

Also

Lifetime learning credit = (20%x1300)+(20% x 12200)

= 260 + 2440

= 2700

But the limit for lifetime learning credit claimed by any taxpayer is $2,000. Therefore, L can claim only $2,000 of her lifetime learning expenses.

Hence, total education credit claimed by L is = 4250 + 2700

= $ 6950