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ris allocates $4,000 of the scholarship money to non-qualified expenses (e.g. room and board) n or required books, then that $4.000 of the scholarship is

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ris allocates $4,000 of the scholarship money to non-qualified expenses (e.g. room and board) n or required books, then that $4.000 of the scholarship is taxable to Chris (not his 6. I instead of tuition oer, Chris would then have $4,000 in education expenses that can be used to claim because they were not paid with nontaxable scholarship money f Chris allocates $4,000 of the scholarship money to room and board and Chris' parents claim as a dependent on their return, then what is the combined tax liability of Chris' parents and Chris? Calculate using the individual tax formula (gross income - adjustments-SD/ID - exemptions = taxable income) and applying the tax rate schedules to taxable income. A. Parents' tax liability (including AOTC credit: 152 B. Chris-tax liability: 100Ae1 19001,25, al K.ro :4.0 Note: In calculating Chis tax liability, remember the following i. Standard Deduction: Dependents potentially have a lower standard deduction (greater of (0) S 1,050 or (ii) earned income + S350, capped at S6350 in 2017)For purposes of the standard deduction, taxable scholarships are treated as earned income for the student. ii. Kiddie Tax: Net unearned income" of a dependent child is taxed at the parents' tax rate (here, 25%). Net unearned income is unearned income less S2100. For purposes of the kiddie tax, the scholarship is treated as unearned income. C. Total family tax liability: . Which option, nontaxable scholarship (Question 3.C.) or claiming the AOTC (Question 6.C.), results in a lower overall family tax liability? Would it make sense for Chris' parents not to claim Chris as a dependent so that Chris can claim the American Opportunity Tax Credit? Note: only $1,000 of the AOTC is refundable. What potential issucl would ris allocates $4,000 of the scholarship money to non-qualified expenses (e.g. room and board) n or required books, then that $4.000 of the scholarship is taxable to Chris (not his 6. I instead of tuition oer, Chris would then have $4,000 in education expenses that can be used to claim because they were not paid with nontaxable scholarship money f Chris allocates $4,000 of the scholarship money to room and board and Chris' parents claim as a dependent on their return, then what is the combined tax liability of Chris' parents and Chris? Calculate using the individual tax formula (gross income - adjustments-SD/ID - exemptions = taxable income) and applying the tax rate schedules to taxable income. A. Parents' tax liability (including AOTC credit: 152 B. Chris-tax liability: 100Ae1 19001,25, al K.ro :4.0 Note: In calculating Chis tax liability, remember the following i. Standard Deduction: Dependents potentially have a lower standard deduction (greater of (0) S 1,050 or (ii) earned income + S350, capped at S6350 in 2017)For purposes of the standard deduction, taxable scholarships are treated as earned income for the student. ii. Kiddie Tax: Net unearned income" of a dependent child is taxed at the parents' tax rate (here, 25%). Net unearned income is unearned income less S2100. For purposes of the kiddie tax, the scholarship is treated as unearned income. C. Total family tax liability: . Which option, nontaxable scholarship (Question 3.C.) or claiming the AOTC (Question 6.C.), results in a lower overall family tax liability? Would it make sense for Chris' parents not to claim Chris as a dependent so that Chris can claim the American Opportunity Tax Credit? Note: only $1,000 of the AOTC is refundable. What potential issucl would

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