Matt is a single father.He paid $5,000 in qualifying expenses for his son,Kyle,to attend the University of Minnesota.Kyle is a sophomore.Matt's AGI is $47,000.What is his allowable American opportunity tax credit?
A)$0.
B)$2,500.
C)$4,000.
D)$5,000.

Question

Quizplus · Accepted Answer

The American opportunity tax credit allows for a credit of up to $2,500 per eligible student per year for the first four years of higher education. In this case, since Kyle is a sophomore, he is still within the four-year eligibility period. However, the credit is also subject to income limitations, which for 2021 are $80,000 for single filers. Since Matt's AGI is $47,000, he is within the income range to qualify for the full credit of $2,500. Therefore, his allowable American opportunity tax credit is $2,500.

Matt Is a Single Father