Unformatted text preview: in qualifying higher education expenses for one, $8,000 for the second, and $3,600 for the third. (a) What is their education credit? (b) How does your answer change if the second and third children are in their 5 th or higher year of higher education? ANS: (a) The American Opportunity credit per student is 100% of the first $2,000 of expenses, and 25% of the next $2,000. So for the first two students, the credit is $2,500 each. For the third student the credit is $2,000 + (25% x $1,600) = $2,400. Total credit: $7,400. (b) In this case, the credit for student #1 would still be $2,500. For the remaining students, tho, the Lifetime Learning credit applies and it is limited to 20% of the first $10,000 of total expenses paid. Here, total expenses = $11,600 ($8,000 + $3,600). So the credit is $10,000 x 20% = $2,000. Total credit for all three students: $4,500....
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 Spring '11
 tax credit

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