Question

In 2022, Elaine paid $2,800 of tuition and $600 for books for her dependent son to attend State University this past fall as a freshman. Elaine files a joint retum with her husband. What is the maximum American opportunity tax credit that Elaine can daim for the tuation payment and books in each of the following alternative situations? Note: Leave no answer blank. Enter zero if applicable. Required: a. Elaine's AG is $80,000. b. Elaine's AGl is $168,000. c. Elaine's AGI is $184,000 Complete this question by entering your answers in the tabs below. Elaine't AGI is $80,000.

Answer 1

Elaine can claim the full $2,500 American Opportunity Tax Credit if her AGI is $80,000, as it is below the phase-out threshold. With an AGI of $168,000, she is eligible for a reduced AOTC amount. At $184,000, Elaine cannot claim the AOTC as her income is above the phase-out limit.

Step-by-step explanation:

In the scenario provided, Elaine's eligibility for the American Opportunity Tax Credit (AOTC) depends on her adjusted gross income (AGI) level. For 2022, the AOTC allows eligible taxpayers to claim a credit for qualified education expenses paid for an eligible student, but the credit amount begins to phase out for taxpayers with higher incomes.

If Elaine's AGI is $80,000, she may claim the full AOTC since her income is below the phase-out threshold for married couples filing jointly, which starts at $160,000. The maximum AOTC per student is $2,500, which comprises 100% of the first $2,000 of qualified education expenses and 25% of the next $2,000. Therefore, Elaine can claim $2,500 for the $2,800 tuition and $600 books, as these amounts exceed the $4,000 threshold to maximize the credit.

However, with an AGI of either $168,000 or $184,000, Elaine's claim would be subject to a phase-out or not available at all. At $168,000, she would only be eligible for a reduced AOTC amount. At $184,000, the AOTC would be completely phased out for her, as the phase-out ends at $180,000 for married couples filing jointly.

Answer 2

Elaine, with an AGI of $80,000, can claim the full $2,500 for the American Opportunity Tax Credit, since her AGI is within the range that allows for the full credit.

Step-by-step explanation:

American Opportunity Tax Credit for Elaine's AGI of $80,000

Elaine paid $2,800 in tuition and $600 for books for her dependent son's freshman year at State University. When filing jointly, the American Opportunity Tax Credit (AOTC) allows for a maximum credit of up to $2,500 per eligible student. It is made up of 100% of the first $2,000 in qualifying expenses and 25% of the next $2,000. Elaine's Adjusted Gross Income (AGI) of $80,000 falls within the range where the AOTC is fully available, which is $80,000 or less for joint filers in 2022.

To calculate the maximum credit Elaine can claim:

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• $2,000 of the tuition will be matched at 100%, which gives $2,000.
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• The remaining $800 of tuition and $600 for books totals $1,400, of which 25% is $350.

Therefore, Elaine can claim the full $2,500 ($2,000 + $350) for the AOTC as long as her AGI stays at $80,000.