Marcia and Tim, a Married Couple, File a Joint Return

question 48

Multiple Choice

Marcia and Tim, a married couple, file a joint return in 2018. Marcia went back to college this year as a full-time graduate student. What is the maximum reduction they can achieve in their taxes for the $6,800 in tuition that Marcia pays if their AGI is $116,000 and the LLC phaseout range is $114,000-$134,000?

• A) $2,000
• B) $1,360
• C) $1,224
• D) $1,000

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Definitions:

Compounded Monthly

Interest calculation method where the interest is calculated and added to the principal balance each month, allowing for the interest to then earn interest in subsequent months.

Monthly Payment

A specific amount of money that is paid every month, commonly associated with loans or leases.

Effective Rate of Return

The actual annual interest earned or paid on an investment or loan, considering the effect of compounding.

RRSP

Registered Retirement Savings Plan, a Canadian financial retirement savings tool for individuals to hold investment assets and savings tax-deferred until withdrawal.