Question

n 2022, Elaine paid $2,160 of tuition and $900 for books for her dependent son to attend State University this past fall as a freshman. Elaine files a joint return with her husband. What is the maximum American opportunity tax credit that Elaine can claim for the tuition payment and books in each of the following alternative situations? Note: Leave no answer blank. Enter zero if applicable, Required: a. Elaine's AGI is $89,250. b. Elaine's AGI is $165,500. Note: Round your intermediate calculations to the nearest whole dollar amount. c. Elaine's AGI is $189,000. Complete this question by entering your answers in the tabs below. Elaine's AGi is 589,250 . Complete this question by entering your answers in the tabs below. Elaine's AGI is $89,250. Elaine's AGI is $165,500. Note: Round your intermediate calculations to the nearest whole dollar amount. Complete this question by entering your answers in the tabs below. Elaine's AGI is $189,000

Answer 1

The American Opportunity Tax Credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.

The amount of the credit is 100 percent of the first $2,000 of qualified education expenses you paid for each eligible student and 25 percent of the next $2,000 of qualified education expenses you paid for that student.

The AOTC has limits on modified adjusted gross income (MAGI). The MAGI limit is $180,000 if you're married filing jointly ($90,000 if you're filing single, head of household, or qualifying surviving spouse).

Based on the information provided in your message, Elaine's AGI is $89,250 in situation a., $165,500 in situation b., and $189,000 in situation c.

In situation a., Elaine's AGI is below the MAGI limit for married filing jointly. Therefore, she can claim the maximum AOTC of $2,500.

In situation b., Elaine's AGI is above the MAGI limit for married filing jointly. Therefore, she cannot claim the AOTC.

In situation c., Elaine's AGI is above the MAGI limit for married filing jointly. Therefore, she cannot claim the AOTC.