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Bob and Sally Are Married, File a Joint Tax Return

question 25

Multiple Choice

Bob and Sally are married, file a joint tax return, have AGI of $112,000, and have two children. Del is beginning her freshman year at State College during Fall 2014, and Owen is beginning his senior year at Southwest University during Fall 2014. Owen completed his junior year during the Spring semester of 2013 (i.e., he took a "leave of absence" during the 2013-2014 school year) . Both Del and Owen are claimed as dependents on their parents' tax return. Del's qualifying tuition expenses and fees total $5,000 for the Fall semester, while Owen's qualifying tuition expenses were $6,100 for the Fall 2014 semester. Del's room and board costs were $3,200 for the Fall semester. Owen did not incur room and board costs since he lived with his aunt and uncle during the year. Full payment is made for the tuition and related expenses for both children at the beginning of each semester. In addition to the children's college expenses, Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist. Bob attended the seminars during July and August 2014. Compute the available education tax credits for Bob and Sally for 2014.

Definitions:

Binomial Experiment

An experiment or trial that can be reduced to two outcomes, success or failure, and is repeated a fixed number of times.

Continuous Random Variables

Variables capable of assuming any value within a specified range, with the potential for infinite variations.

Binomial Distribution

A probability distribution that summarizes the likelihood that a variable will take one of two independent values under a given set of parameters or conditions.

Independent Trials

Independent Trials are experiments or processes in which the outcome of any given trial does not affect the outcome of any other trial.