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 $3,950 for Kai (who is a half-time student) and $7,900 for Angel.
Required:
What education tax credits are available if Ariana and John report modified AGI of $173,800?
What education tax credits are available if Ariana and John report modified AGI of $173,800 and Angel is taking one class a semester (is less than a half-time student) and not taking classes in a degree program?

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Briefing:

Without being subject to the modified AGI limits, Ariana and John are permitted to claim the following quantity and type of college tax credits:

Education Tax Amount Education Tax Credits

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

$1,560 ($7,800 x 20%) for Angel) A credit towards lifelong learning

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

What are the American Talent Credit and indeed the Lifetime Learning Credit?

The Lifetime Learning Credit is applicable to earn a degree schooling (Angel's) and includes 20% of the inaugural $10,000 reimbursed for tuition, as opposed here to American Opportunity Credit (Kia's), which only covers the first four years of thread education at a rate of 40% of $2,500 per college freshman because Kia is a half-time student.

The American Enterprise Credit and the Number Of career Credit cannot be claimed by the same taxpayer on the same pupil for the same tax year, it is important to remember.

Thus, Ariana and John may deduct a total of $2,560 in school tax credits for Kai and Angel.

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