Bob and Sally are married,file a joint tax return,have AGI of $108,000,and have two children.Del is beginning her freshman year at State College during Fall 2010,and Owen is beginning his senior year at Southwest University during Fall 2010.Owen completed his junior year during the Spring semester of 2009 (i.e. ,he took a "leave of absence" during the 2009-2010 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 2010 semester.Del's room and board costs were $3,200 for the Fall semester.Owen did not incur room and board costs since 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 2010.Compute the available education tax credits for Bob and Sally for 2010.

Question

Quizplus · Accepted Answer

Bob and Sally can claim the American Opportunity Credit (AOC) for both Del and Owen's tuition expenses. The AOC is 100% of the first $2,000 of qualified education expenses and 25% of the next $2,000, for a maximum credit of $2,500 per year, per student.

For Del's expenses: 
Qualifying tuition expenses: $5,000 
AOC credit: $2,500

For Owen's expenses: 
Qualifying tuition expenses: $6,100 
AOC credit: $2,500

Bob can also claim the Lifetime Learning Credit (LLC) for his professional education expenses. The LLC is 20% of up to $10,000 of qualifying education expenses per year, per taxpayer.

For Bob's expenses: 
Qualifying education expenses: $3,000 
LLC credit: $600

Therefore, the total education credits available for Bob and Sally are:
AOC credit for Del: $2,500 
AOC credit for Owen: $2,500 
LLC credit for Bob: $600

Total education credits: $5,600 (C)

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