Joe, who is single with modified AGI of $84,000, is sending his son to his first year of college. The total tuition and related payments during the year amounted to $18,000. Joe has not taken advantage of any other type of tax benefit related to educational expenses. His American Opportunity Tax Credit is

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The American Opportunity Tax Credit is a tax credit for qualified education expenses paid for the first four years of post-secondary education. The maximum credit is $2,500 per eligible student. Joe's son is in his first year of college, so Joe is eligible for the full $2,500 credit. However, Joe's modified AGI is $84,000, which is above the phase-out income limit for the credit. As a result, Joe's credit is reduced to $1,500.

Joe, Who Is Single with Modified AGI of $84,000, Is