Bradley has two college-age children, Clint, a freshman (his first year in college) at State University, and Abigail, a junior at Northwest University (her third year of college). Both Clint and Abigail are full-time students. Bradley is in graduate school.Clint’s expenses for the year are as follows: $3,200 tuition and $500 books and course materials.Abigail’s expenses for the year are as follows: $7,200 tuition, $1,200 books and course materials, and $4,500 room and board.Bradley paid $5,000 of tuition for graduate school and $600 for books. Bradley is married, files a joint tax return, claims both children as dependents, and has a combined AGI with his wife of $139,000 for 2020. Bradley has determined that the available education credits are more beneficial than the available deductions.Determine the following: A. Clint:Which credit should he take? Total eligible expenses: Show calculation of maximum credit allowed: B. Abigail:Which credit should she take?Total eligible expenses: Show calculation of maximum credit allowed: C. BradleyWhich credit can he take? Total eligible expenses: Show calculation of maximum credit allowed:

A C American opportunity tax credit Total Eligible Expenses (3200+500) $3,700 Maximum Credit Allowed (2000+1800*25%) $2,450 First $2000, full credit, next $2,000 @ 25% B A American opportunity tax credit Total Eligible Expenses (7200+1200) $8,400 Maximum Credit Allowed (2000+2000*25%) $2,500 C B Lifetime learning credit Total Eligible Expenses (5000+600) $ 5,600 Maximum Credit Allowed $ 560 (5600*20%)*(136000-139000) ÷ (136000-116000) Credit is 20% of the first $10,000. Note: MAGI Phase-out for joint filers is in between $116,000 to $136,000.

Answered: C. Bradley Which credit can he take?…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bradley has two college-age children, Clint, a freshman (his first year in college) at State University, and Abigail, a junior at Northwest University (her third year of college). Both Clint and Abigail are full-time students. Bradley is in graduate school.

Clint’s expenses for the year are as follows: $3,200 tuition and $500 books and course materials.
Abigail’s expenses for the year are as follows: $7,200 tuition, $1,200 books and course materials, and $4,500 room and board.
Bradley paid $5,000 of tuition for graduate school and $600 for books.
Bradley is married, files a joint tax return, claims both children as dependents, and has a combined AGI with his wife of $139,000 for 2020. Bradley has determined that the available education credits are more beneficial than the available deductions.

Determine the following:

A. Clint:

Which credit should he take?
Total eligible expenses:
Show calculation of maximum credit allowed:

B. Abigail:

Which credit should she take?
Total eligible expenses:
Show calculation of maximum credit allowed:

C. Bradley

Which credit can he take?
Total eligible expenses:
Show calculation of maximum credit allowed:

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