Jermaine and Kesha are married, file a joint tax return, have AGI of $82,500, and have two children.Devona is beginning her freshman year at State University during fall 2019, and Arethia is beginning her senior year at Northeast University during fall 2019 after having completed her junior year during the spring of that year.Both Devona and Arethia are claimed as dependents on their parents' tax return. Devona's qualifying tuition expenses and fees total $4,000 for the fall semester and Arethia's qualifying tuition expenses and fees total $6,200 for each semester during 2019.Full payment is made for the tuition and related expenses for both children during each semester.The American Opportunity credit available to Jermaine and Kesha for 2019 is:
A)$2,500.
B)$3,000.
C)$5,000.
D)$6,000.

Question

Quizplus · Accepted Answer

Both Devona and Arethia qualify for the American Opportunity credit, with a maximum credit per student of $2,500. Therefore, Jermaine and Kesha are eligible for a total credit of $10,000 ($2,500 x 4 semesters). However, the credit is limited to the amount of tax liability, so if their total tax liability for 2019 is less than $10,000, they can only claim the amount that offsets their tax liability. Since their AGI is $82,500, they likely have a tax liability high enough to claim the full $5,000 credit for 2019.

Jermaine and Kesha Are Married, File a Joint Tax Return