Marcia and Tim, a married couple, file a joint return in 2017. Marcia went back to college this year as a full-time graduate student. What is the maximum reduction they can achieve in their taxes for the $6,800 in tuition that Marcia pays if their AGI is $114,000 and the LLC phaseout range is $112,000-$132,000?

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The lifetime learning is $6,800 x .2 = $1,360; but it is subject to a $136 reduction [$1,360 - (2,000/$20,000 x $1,360) or a credit of $1,224 based on their AGI of $113,000. Alternatively, the tuition and fees deduction of $4,000 for AGI would reduce taxes by 25% or $1,000; in this case, the credit would be better than the deduction.

Marcia and Tim, a Married Couple, File a Joint Return