Question

Bob and Sally are married, file a joint tax return, report AGI of $120,000, and have two children. Del is beginning her freshman year at State College during fall 2019, and Owen is beginning his senior year at Southwest University during fall 2019. Owen completed his junior year during the spring semester of 2018 (i.e., he took a "leave of absence" during the 2018-2019 school year). Both Del and Owen are claimed as dependents on their parents’ tax return.​Del’s qualifying tuition expenses and fees total $5,000 for the fall semester and Owen’s qualifying tuition expenses were $6,100 for the fall 2019 semester. Del’s room and board costs were $3,200 for the fall semester. Owen did not incur room and board costs because he lived with his aunt and uncle during the year.Full payment is made for the tuition and related expenses for both children at the beginning of each semester. In addition to the children’s college expenses, Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist. Bob attended the seminars during July and August 2019. Compute the available education tax credits for Bob and Sally for 2019.A. $3,100B. $5,000C. $5,480D. $5,600

Answer 1

To compute the education tax credits for Bob and Sally for 2019, they can claim the American Opportunity Credit (AOC) and the Lifetime Learning Credit (LLC). They can claim the AOC for their daughter's qualifying tuition expenses and the LLC for her room and board costs, resulting in a total credit of $5,480.

Step-by-step explanation:

To compute the education tax credits for Bob and Sally for 2019, we need to consider the American Opportunity Credit (AOC) and the Lifetime Learning Credit (LLC). The AOC allows a credit of 100% of the first $2,000 and 25% of the next $2,000 of qualified education expenses, while the LLC allows a credit of 20% of up to $10,000 of qualified education expenses.

Bob and Sally can claim the AOC for their daughter Del's qualifying tuition expenses and fees of $5,000, as well as the LLC for Del's room and board costs of $3,200. This would result in a total education tax credit of $5,480 for Del's expenses.

Bob and Sally cannot claim any education tax credit for their son Owen's expenses, as he did not have any qualifying tuition expenses or fees.

Answer 2

B) $5,000

Step-by-step explanation:

Bob and Sally can claim an American Opportunity (AO) credit for both of their children, Del and Owen.

Del's AO credit is $2,500 (100% of the initial $2,000 qualifying expenses and 25% of the next $2,000 qualifying expenses).

Owen's AO credit is the same as Del's, $2,500.

The total American Opportunity credit claimed is $5,000 ($2,500 + $2,500)