Question about tax credit.?

Question

Mr X is making 16000, in wages. He paid 11000 in his third semester for 2006, as undergraduate tuition fees. He is not choosing not to defer his student loan and paying them currently. He paid 1100 as student loan interest for the current year.

He also received $8500 from the university to pursue bachelors degree and spend $4000 on tuition and $3000 on books and supplies and $2500 for rooam and boarding. Can these things be included in Mr X's Gross Income and what is the code section that covers this income/deduction.

Answer 1

Wow. Do you honestly think that you're going to get the correct answer from us?

No offense meant but it's your backside in tha sling if you get it wrong. Check the site below and look in their faqs to find your question then do the research.

Answer 2

Second part first: per Internal Revenue Code Sec 117 of the $8500 scholarship The $4000 and the $3000 are "qualified tuition expenses, and reduce the taxable amount to $3000.

Add that to his wage of 16000 gives total income of $19500, less $1100 gives AGI of $18400.

Assuming he is single with no dependents we get taxable income of 10050, after deducting Std. deduction (5150) and personal exemption (3200), both for 2006 amounts.

You can look up tax on $10050.

Whether eligible for the Hope credit or not, the Lifetime Learning Credit of $2000 (20% of $10000) will exceed the maximum Hope of $1650.

Subtract $2000 credit form the tax ou looked up & Mr X's tax is zero.

Answer 3

Sounds like a homework question. I don't answer homework questions.