Steve goes to Tri-State University and pays $40,000 in tuition. Steve works to pay for his schooling and has an AGI of $37,000. How much is his American Opportunity tax credit?

Question

Quizplus · Accepted Answer

The American Opportunity Tax Credit allows for a maximum credit of $2,500 per eligible student. It is calculated as 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000. Steve's tuition of $40,000 far exceeds the amount needed to qualify for the maximum credit. His AGI of $37,000 does not disqualify him from claiming the credit, as the phase-out for the credit begins at $80,000 for single filers.

Steve Goes to Tri-State University and Pays $40,000 in Tuition