Client Jefferson Smith Education Expenses

I met with our client, Jefferson, this afternoon and I need your assistance. We are currently

advising Jefferson on his 2018 tax return. We would like some advice concerning possible

education deductions and credits by December 7, 2018.

Jefferson works as a fisherman (as an employee) in Florida from October through December.

For the current year, his wages are $80,000. Recently, Jefferson decided to go to college to

become an accountant. In 2018, he enrolled in the local University to start his degree, he has

been taking on-line courses as a full-time student since then.

Jefferson is a single taxpayer with no dependents and claims the standard deduction. No one else

can claim him as a dependent. His income tax bracket is 25%. He incurred qualified educational

expenses of $7,000 for 2018.

I have prepared a preliminary tax return without taking into account any education deductions or

credits. The current 2018 figures are as follows:

Gross Income= $80,000

Adjusted Gross Income=80,000

Taxable income = $68,000

Income tax due before any education deductions/credits = $17,400

Read page 6-29 (Section 6-3d in the ebook), page 8-24 (Section 8-7b in the ebook) and pages

8-29 through 8-31(the section on Higher Education Tax Credits in the ebook) of the text to

familiarize yourself with: 1) the Deduction for Higher Education Expenses, 2) the American

Opportunity Credit, and 3) the Lifetime Learning Credit. Afterwards, please prepare a memo to

me so that I can advise Jefferson of the best course of action to minimize his taxes. In your

memorandum you should answer the following questions:

1) What are the available deductions and credits for Jefferson's education expenses?

2

2) Which of these options is best for Jefferson and Why?

3) What will his final tax bill be after considering the education tax breaks?

Please note that you should explain WHY a particular option is best for Jefferson. A

memorandum that simply gives a yes/no answer or that simply states the best option without any

explanation will not receive credit for the assignment. Lastly, your memorandum should not just

list out calculations or charts (these are not needed), you must EXPLAIN your analysis with your

words.

Due Date

The due date is Friday, December 7, 2018.

Submission Requirements

You are to turn in a printed copy of your memo on the listed dates. Late submissions for this

assignment will not be accepted.

Format

The format of the memo should be similar to the memo used here (i.e. you may use the Title and

"To" "from" and "re" format of this document). The memo should be 12 point font, Times New

Roman, single spaced. The minimum page requirement is 1 page. The maximum page limit is 2

pages. Any submission that falls outside of these limits will not be graded. I have included a

rubric for how this assignment will be graded on blackboard.

Citation & Referencing

The information that you need to complete the assignment is located in the book. Therefore, you

do not need to cite any information that you receive from the book (I will assume that you've

gotten this information from the book).

Extra Credit Opportunity

You can earn extra credit by citing primary authority. Refer to Chapter 16 for differences

between primary and secondary authority.