Question

Ariana and John, who file a joint return, have two dependent children, Kai and Angel. Kai is a freshman at State University and Angel is working on her graduate degree. The couple paid qualified expenses of $3,900 for Kai (who is a half-time student) and $7,800 for Angel.
Required:
What are the amount and type of education tax credits that Ariana and John can take, assuming they have no modified AGI limitation?

Answer 1

The amounts and types of education tax credits that Ariana and John can take without modified AGI limitation are as follows:

              Amount of Education Tax     Type of Education Tax Credits

For Kai      $1,000 ($2,500 x 40%)        The American Opportunity Credit

For Angel $1,560 ($7,800 x 20%)        The Lifetime Learning Credit

Total tax credit = $2,560 ($1,000 + $1,560)

What are the American Opportunity Credit and the Lifetime Learning Credit?

Whereas the American Opportunity Credit (Kia's) covers only the first 4 years of post-secondary education at 40% of $2,500 per student because Kia is a half-time student, the Lifetime Learning Credit applies to graduate schooling (Angel's) and covers 20% of the first $10,000 paid for tuition.

We must note that no taxpayer can claim both the American Opportunity Credit and the Lifetime Learning Credit for the same student in the same tax year.

Thus, the total education tax credit that Ariana and John can claim for both Kai and Angel is $2,560.

Learn more about education tax credits at brainly.com/question/8166956