Bob and Sally are married,file a joint tax return,report AGI of $114,000,and have two children.Del is beginning her freshman year at State College during Fall 2015,and Owen is beginning his senior year at Southwest University during Fall 2015.Owen completed his junior year during the Spring semester of 2014 (i.e. ,he took a "leave of absence" during the 2014-2015 school year).Both Del and Owen are claimed as dependents on their parents' tax return.Del's qualifying tuition expenses and fees total $5,000 for the Fall semester,while Owen's qualifying tuition expenses were $6,100 for the Fall 2015 semester. Del's room and board costs were $3,200 for the Fall semester.Owen did not incur room and board costs,as he lived with his aunt and uncle during the year. Full payment is made for the tuition and related expenses for both children at the beginning of each semester.In addition to the children's college expenses,Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist.Bob attended the seminars during July and August 2015.Compute the available education tax credits for Bob and Sally for 2015.
A)$3,100
B)$5,000
C)$5,480
D)$5,600
E)None of the above

Question

Bob and Sally are married,file a joint tax return,report AGI of $114,000,and have two children.Del is beginning her freshman year at State College during Fall 2015,and Owen is beginning his senior year at Southwest University during Fall 2015.Owen completed his junior year during the Spring semester of 2014 (i.e. ,he took a "leave of absence" during the 2014-2015 school year).Both Del and Owen are claimed as dependents on their parents' tax return.Del's qualifying tuition expenses and fees total $5,000 for the Fall semester,while Owen's qualifying tuition expenses were $6,100 for the Fall 2015 semester. ​ Del's room and board costs were $3,200 for the Fall semester.Owen did not incur room and board costs,as he lived with his aunt and uncle during the year. ​ Full payment is made for the tuition and related expenses for both children at the beginning of each semester.In addition to the children's college expenses,Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist.Bob attended the seminars during July and August 2015.Compute the available education tax credits for Bob and Sally for 2015.
A)$3,100
B)$5,000
C)$5,480
D)$5,600
E)None of the above

Quizplus · Accepted Answer

Bob and Sally are eligible to claim the American Opportunity Credit (AOC) for Del and the Lifetime Learning Credit (LLC) for Owen, as they meet the requirements for both credits. Bob and Sally can claim a maximum AOC of $2,500 for Del's qualifying expenses of $5,000, as long as their modified AGI does not exceed $160,000. They can also claim a maximum LLC of $2,024 for Owen's qualifying expenses of $6,100, as long as their modified AGI does not exceed $130,000.

Bob's professional education expenses do not qualify for an education tax credit, as they are not related to a degree program.

Therefore, the total available education tax credits for Bob and Sally are $2,500 for the AOC and $2,980 ($2,024 LLC + $956 remaining AOC) for the LLC, for a total of $5,480.

The correct answer is C.

Bob and Sally Are Married,file a Joint Tax Return,report AGI