In the fall of 2019,James went back to school to earn a master of accountancy degree.He incurred $7,000 of qualified educational expenses and his modified AGI for the year was $40,000.His Lifetime Learning Credit is
A)$1,000.
B)$1,400.
C)$1,800.
D)$2,500.

Question

Quizplus · Accepted Answer

James is eligible for the Lifetime Learning Credit, which is calculated as 20% of the first $10,000 of qualified educational expenses. Since James incurred $7,000 in expenses, he can receive a maximum credit of $1,400 (20% of $7,000). However, the credit is phased out for modified AGI between $58,000 and $68,000 for taxpayers filing single. Since James' modified AGI is only $40,000, he is eligible for the full credit amount of $1,400.

In the Fall of 2019,James Went Back to School to Earn