Donna and Walt paid $3,000 in qualified expenses for their son, Jimmy, to attend the South Coast Business College. Jimmy is a business major in his first year. Three years ago, Jimmy was arrested and convicted of felony drug possession. He has not been in any trouble since then. What education credits are available for Donna and Walt and how much can they claim?
What will be an ideal response?
Due to Jimmy's felony drug conviction, the American opportunity tax credit is not available. Donna and Walt can claim the lifetime learning credit, which allows a credit for 20% of all qualified expenses, up to a maximum credit of $2,000 per taxpayer. Donna and Walt can take a credit of $600 ($3,000 × 20%).
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