Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

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 Jeffersons education expenses?

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Richard Lewis, David Pendrill

5th Edition

0273622919, 978-0273622918

More Books

Students also viewed these Accounting questions

Question

What role do hormone levels play in mood?

Answered: 1 week ago

Question

how does public goods cause market outcomes to be inefficient

Answered: 1 week ago

Question

What is Larmors formula? Explain with a suitable example.

Answered: 1 week ago