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 2012, and Owen is beginning his senior year at Southwest University during Fall 2012.Owen completed his junior year during the Spring semester of 2010 (i.e., he took a "leave of absence" during the 2011-2012 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 2012 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 2012.Compute the available education tax credits for Bob and Sally for 2012.
A)$3,100.
B)$5,000.
C)$5,480.
D)$5,600.
E)None of the above.

Question

Quizplus · Accepted Answer

The available education tax credits for Bob and Sally can be calculated as follows:

1. American Opportunity Credit:
- Del is eligible for $2,500 credit (100% of the first $2,000 and 25% of the next $3,000) based on her qualifying tuition expenses and fees.
- Owen is eligible for $1,525 credit (100% of the first $2,000 and 25% of the next $4,100) based on his qualifying tuition expenses.
- Bob and Sally can claim a total of $4,025 American Opportunity Credit ($2,500 for Del + $1,525 for Owen).

2. Lifetime Learning Credit:
- Bob is eligible for $600 Lifetime Learning Credit (20% of the first $3,000 of his professional education seminar expenses).

Therefore, the total available education tax credits for Bob and Sally for 2012 is $5,480 ($4,025 for American Opportunity Credit + $600 for Lifetime Learning Credit). The correct answer is C.

Bob and Sally Are Married, File a Joint Tax Return