Bob and Sally are married, file a joint tax return, report AGI of $118,000, and have two children. Del is beginning her freshman year at State College during Fall 2018, and Owen is beginning his senior year at Southwest University during Fall 2018. Owen completed his junior year during the Spring semester of 2017 (i.e., he took a "leave of absence" during the 2017-2018 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 2018 semester. Del's room and board costs were $3,200 for the Fall semester. Owen did not incur room and board costs, as 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 2018. Compute the available education tax credits for Bob and Sally for 2018.
A) $3,100
B) $5,000
C) $5,480
D) $5,600

Question

Quizplus · Accepted Answer

Bob and Sally can claim the American Opportunity Credit for both Del and Owen's qualifying tuition expenses, for a total credit of $4,400 ($2,500 for Owen and $1,900 for Del). They can also claim the Lifetime Learning Credit for Bob's professional education seminars, for a credit of $1,080 ($3,000 x 0.36).

The total education credits available to Bob and Sally are therefore $5,480 (American Opportunity Credit of $4,400 + Lifetime Learning Credit of $1,080).

Bob and Sally Are Married, File a Joint Tax Return