C, a single mother, has modified AGI of $42,000.In 2011, C's daughter, D, begins studying for her bachelor's degree as a full-time student at County University.On September 1, C pays $3,000 in qualified tuition for D's first semester.The amount of allowable American Opportunity Tax Credit scholarship credit allowed to C is
A)$2,500
B)$1,800
C)$1,350
D)$400
E)$0

Question

Quizplus · Accepted Answer

The American Opportunity Tax Credit allows for a credit of 100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000, for a maximum credit of $2,500 per student. Since C paid $3,000 in qualified tuition for D, the calculation would be $2,000 + (25% of $1,000) = $2,250, but the maximum credit allowed is $2,500.

C, a Single Mother, Has Modified AGI of $42,000