Question

Education Tax Credits (LO 6.5)

Jasper is single and a computer software consultant with a college degree. He feels that one of the reasons for his success is that he continually updates his knowledge by taking classes at the local college in various areas related to software design and information technology. This year he spent $2,000 on course tuition and fees.

a. Assuming Jasper has AGI of $92,000, how much lifetime learning credit can Jasper claim on his tax return?

If Jasper were married and supporting a wife who was not working, how much lifetime learning credit can Jasper claim?

b. Assuming Jasper is single and has AGI of $45,000, how much lifetime learning credit can Jasper claim on his tax return? $

Answer 1

Lifetime Learning credit is available only if

• the education expense is made at eligible educational institution,

• MAGI is up to $67000

• in case of joint return the limit of MAGI is up to $134000

There is no limit for the number of years on which you can take credit of LLC, but it is limited to $2000 per return.

In the given case assuming AGI = MAGI, the answer would be as follows

a) Jasper cannot claim any credit, as his AGI is $92,000. Even if he has taken this education from eligible educational institute, he is not eligible as he does not fall under the given monetary limits.

b) In case Jasper supports his wife, who is not working and files a joint return, then assuming education is from eligible educational institute, he can claim LLC of $2000 this year, being higher of actual or $2000 as he will file joint return.

c)In this case his AGI is only $45,000 thus he can claim deduction of LLC of $2,000.