In 2020, Elaine paid $2,880 of tuition and $420 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?
a. Elaine’s AGI is $81,000.
Please show how you got your answer.
Homework Answers
Ans:
Maximum American Opportunity Tax Credit Elaine can claim for the tuition fee payment and the book if her AGI is $81000
| Description | Explanation | Amount |
| AOTC before phase out | (100% of $2000) + 25% of [($2880-$2000) + $420] | $2325 |
| AGI | $81000 | |
| Phase out AGI (Married, filing jointly) | $180000 | |
| Phase out range | ($81000-$180000) | $0 |
| Excess AGI | $0 | |
| Phase out amount | $0 | |
| AOTC after phase out | $2325 |
Notes and Explanation:
American Opportunity Tax Credit (AOTC): AOTC is a tax credit for students or their parents in relation to his qualified educational expenses which give them opportunity to reduce college education expenses for the first four years of post secondary education. It is also available for those who have claimed the student as dependent.
Income Limits for AOTC:
| Status | Maximum Income for Full Credit | Maximum Income for Partial Credit (Also called Phase out AGI) |
| Single | $80000 | $90000 |
| Head of Household | $80000 | $90000 |
| Married, filing jointly | $160000 | $180000 |
| Married, filing separately | $80000 | $90000 |
| Qualifieed Widower | $80000 | $90000 |
Qualifying expenses for AOTC:
- Tuition Fee
- Books
- Classroom supplies
- Fees to enroll in a course or program.
How much AOTC:
- Maximum of $2500 per student per year.
- Amount of Credit- 100% on first $2000 of qualified expenses and 25% on next $2000 of qualified expenses.
All the above provisions are applicable to Elaine for AOTC.
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