In the fall of 2013,James went back to school to earn a master of accountancy degree.He incurred $7,000 of qualified educational expenses and his modified AGI for the year was $40,000.His Lifetime Learning Credit is

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The Lifetime Learning Credit is equal to 20% of the first $10,000 of qualified educational expenses, for a maximum credit of $2,000. However, the credit phases out for taxpayers with modified AGI between $59,000 and $69,000 for single filers or between $118,000 and $138,000 for married filing jointly. Since James' modified AGI is below the phase-out range, he is eligible for the full credit of 20% of $7,000, which is $1,400. Therefore, the best choice is B.

In the Fall of 2013,James Went Back to School to Earn