Bob and Sally are married,file a joint tax return,have AGI of $108,000,and have two children.Del is beginning her freshman year at State College during Fall 2011,and Owen is beginning his senior year at Southwest University during Fall 2011.Owen completed his junior year during the Spring semester of 2009 (i.e.,he took a "leave of absence" during the 2010-2011 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,while Owen's qualifying tuition expenses were $6,100 for the Fall 2011 semester.Del's room and board costs were $3,200 for the Fall semester.Owen did not incur room and board costs since 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 2011.Compute the available education tax credits for Bob and Sally for 2011.

Question

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Bob and Sally are eligible to claim the American Opportunity Credit (AOC) and the Lifetime Learning Credit (LLC) for their children's college expenses, as well as the Lifetime Learning Credit for Bob's professional education expenses.

For Del's expenses, they would be eligible to claim a maximum AOC of $2,500 (100% of the first $2,000 in qualifying expenses plus 25% of the next $3,000) and a maximum refundable credit of $1,000. However, since their AGI is over $160,000, the amount of the credit is reduced. The phase-out range for the AOC begins at $160,000 and ends at $180,000, so their income is $52,000 above the phase-out threshold. They must reduce the AOC by $52,000/$10,000, which gives them a reduction of $5,200. Therefore, they can claim an AOC of $300 for Del's expenses.

For Owen's expenses, they would also be eligible to claim a maximum AOC of $2,500 and a maximum refundable credit of $1,000. However, since Owen is in his fourth year of college, he is no longer eligible for the AOC. Instead, they can claim the LLC, which allows for a credit of 20% of up to $10,000 in qualifying expenses. Therefore, they can claim an LLC of $1,220 for Owen's expenses.

For Bob's professional education expenses, they can claim the LLC, which allows for a credit of 20% of up to $10,000 in qualifying expenses. Therefore, they can claim an LLC of $600 for Bob's expenses.

Adding up the credits, they can claim a total of $2,120 in education tax credits. However, since $1,000 of the AOC is refundable, they can also claim a refund of $1,000. Therefore, their total available education tax credits are $3,120.

Bob and Sally Are Married,file a Joint Tax Return,have AGI