[OnToTheNextOne]

Can anyone explain the phaseout procedures for these two credits? Im having some trouble with them

[FIFOisbetterthanLIFO]

What are the income limits for American Opportunity Credit?
To claim the full credit, your MAGI, modified adjusted gross income must be $80,000 or less ($160,000 or less for married filing jointly).
You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).

What are the income limits for Lifetime Learning Credit?
To claim the full credit, your MAGI, modified adjusted gross income must be $52,000 or less ($104,000 or less for married filing jointly).
If your MAGI is over $52,000 but less than $62,000 (over $104,000 but less than $124,000 for married filing jointly), you receive a reduced amount of the credit.
If your MAGI is over $62,000 ($124,000 for joint filers), you cannot claim the credit.

FAR - Passed (82)
BEC - Passed (76)
AUD - Passed (89)
REG - Passed! (81)
AICPA Ethics

Licensed CPA

[OnToTheNextOne]

how do the phaseout reductions? I'm led to believe its a percentage of the MAGI over the start of the phaseout divided by the amount to reach complete phaseout and multiply that by the amount credit amount, is that correct?

[Anonymous]

Here is my understanding of it.

American Opportunity Credit:
Credit amount is $2,500. Breakdown provided by the books is: 100% of the first $2,000 and 25% of the second $2,000 hence $2,500. The credit is eliminated if income is more than $90,000 (for single folks).

Lifetime Learning Credit:
Credit amount is 20% of the first $10,000 so basically it can be up to $2,000. Income limit is $52,000 (for single folks).

[Author]

Replies