Ch 9: Tax Credit questions and well detailed answers
Jim, a married filing jointly taxpayer, paid $5,000 of qualified tuition and related expenses for each of his
twin daughters, Stephanie and Amanda, during 2020. They started their freshman year of college during
2020. Jim was very excited that both daughters excelled in the college environment; especially since
Stephanie had a drug addiction during her senior year of high school (Jim had a friend on the college
admissions board that thankfully overlooked Stephanie's felony drug conviction). Jim also paid $2,000 of
qualified tuition and related expenses for his daughter Linda's sophomore year of college and $3,000 for
his own master's program. Jim claims all three of his daughters as dependents. His modified gross
income for the year is $50,000. What is the available Lifetime Learning Credit assuming he elects to use
the Lifetime Learning Credit for those expenses that do not qualify for the American Opportunity Tax C -
$1,600
($5,000 + $3,000) x 20%
Sara, who is single, contributed $6,000 to her Roth IRA for 2020. She had MAGI of $17,000 for 2020 and
used the single filing status. She has never taken a distribution from a retirement plan. What is her
maximum retirement savings credit for 2020? - $1,000
Her maximum credit for 2020 is $1,000 ($2,000 x 50%).
In 2020, Ginger paid $5,000 for qualified solar electric property and $4,000 for qualified fuel cell
property with one kilowatt of capacity for her vacation home. She also paid $10,000 for qualified solar
water heating property for her personal residence. What is her maximum residential energy efficient
property credit for 2020? - $3,900
($5,000 x 26%) + ($10,000 x 0.26%)
Jim, a married filing jointly taxpayer, paid $10,000 of qualified tuition and related expenses for each of
his twin daughters, Stephanie and Amanda, during 2020. They started their freshman year of college
during 2020. Jim was very excited that both daughters excelled in the college environment; especially
since Stephanie had a drug addiction during her senior year of high school (Jim had a friend on the
college admissions board that thankfully overlooked Stephanie's felony drug conviction). Jim also paid
$2,000 of qualified tuition and related expenses for his daughter Linda's sophomore year of college, and
$3,000 for his own master's degree program. Jim claims all three of his daughters as dependents. His
modified gross income for the year is $50,000. What is the available American Opportunity Tax Credit
for 2020? - $4,500
