Question

In 2018, Elaine paid $2,760 of tuition and $1,060 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 credit that Elaine can claim for the tuition payment and books in each of the following alternative situations? What is the American Opportunity Credit if:____________.

a. Elaine’s AGI is $92,750.
b. Elaine’s AGI is $164,500.
c. Elaine’s AGI is $211,000.

Answer 1

a. Elaine’s AGI is $92,750.

• $2,000 + (25% x $1,820) = $2,455

b. Elaine’s AGI is $164,500.

• $2,455 - (5 x $125) = $1,830

c. Elaine’s AGI is $211,000.

• AOC = $0

Step-by-step explanation:

During 2018, the American Opportunity Credit for married taxpayers filing jointly started to phase out when their AGI was over $160,000. Once the AGI reached $180,000, the credit phased out completely.

The AOC covered 100% of the first $2,000 in qualified expenses and then up to 25% of the next $2,000. The maximum amount = $2,000 + (25% x $2,000) = $2,500