Chapter 4, Problem 3DC1

Summary Introduction

Case summary:

Mr. & Mrs. N are preparing to file their 2014 income taxes. H’s mother, M, has moved in with them, so H is no longer working. M is dependent on their income for support except for her $536 monthly Social Security benefit. H is taking this opportunity to work toward her master’s degree.

Character in this case:

Z, H and M.

Adequate information:

M’s unreimbursed medical expense is $5,100.

Z’s Wage and Tax Statement is $54,500.

H’s education expense is $5,450

H’s student loan interest payment is $590.

To determine:

The tax advantages that are attributable to H’s education expenses and whether the N can include them on their returns.