Holly and Greg have triplets (graduating high school seniors) who will all be en

Question

Holly and Greg have triplets (graduating high school seniors) who will all be enrolling in college in the fall. Holly and Greg pay $2,500 for Michael's tuition and fees, $4,000 for Sandra's tuition and fees, and $10,000 for Mariah's tuition and fees. Assuming Holly and Greg have an AGI of $1,000,000, what are the amounts of the American Opportunity Credit they can claim for Michael, Sandra, and Mariah? Assuming Holly and Greg have an AGI of $95,000, what are the amounts of the American Opportunity Credit they can claim for Michael, Sandra, and Mariah?

Explanation / Answer

American Opportunity Tax Credit is a credit for qualified education expenses paid for an eligible student for the first four years of higher education.One can get a maximum annual credit of $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, one can have 40 percent of any remaining amount of the credit (up to $1,000) refunded.

a. Holly and Greg can not avail the AOC as their AGI exceeds the limit of AGi upto which one can claim AOC; which is $160000 or less in case of married and filing jointly

b.  Amount of AOC that Holly and Greg can claim for Michael , Sandra and Mariah is $2500 eah which is the maximum credit that can be availed per eligible student.

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