Answer the following statements true (T) or false (F)

Question

1. The adoption credit based on qualified adoption expenses is generally allowed in the year the adoption is finalized.
2. Taxpayers with income below phase-out amounts are allowed a child credit of $2,000 for each qualifying child under age 19 or under age 24 if a full-time student.
3. A taxpayer supports an elderly relative who satisfies the Sec. 152 criteria for "qualifying relative." The taxpayer may claim a $500 tax credit.
4. Qualified tuition and related expenses eligible for the American Opportunity Tax Credit are limited to those incurred the first two years of postsecondary education.
5. Jay and Cara's daughter is starting her freshman year of college. Jay and Cara will be able to claim the American Opportunity Tax Credit for a percentage of the cost of tuition, required fees and course materials, but the room and board charges will not qualify for the credit.

Answer 1

1. TRUE
The year of the finalization of the adoption is the determinant year for the adoption credit.
2. FALSE
The tax law provides taxpayers with a credit for each qualifying child. For this purpose, a child must be under age 17.
3. TRUE
Effective in 2018, a $500 nonrefundable credit for "qualifying relatives" under Sec. 152 is available.
4. FALSE
Qualifying expenses for the AOTC are limited to the first four years of postsecondary education.
5. TRUE
Only tuition, required fees and course materials qualify for the American Opportunity Tax Credit.