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 2012, and Arethia is beginning her senior year at Northeast University during Fall 2012 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, while Arethia's qualifying tuition expenses and fees total $6,200 for each semester during 2012.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 2012 is:
A)$2,500.
B)$3,000.
C)$5,000.
D)$6,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Since both children are claimed as dependents on their parents' tax return, Jermaine and Kesha can claim both of their children's qualifying tuition expenses for the American Opportunity credit.
The maximum credit per student is $2,500, so for two children, the maximum credit would be $5,000. Since the parents' AGI is below the phase-out threshold for the credit ($160,000 for married filing jointly in 2012), they are eligible to claim the full $5,000 credit.

Jermaine and Kesha Are Married, File a Joint Tax Return