Olivia Learner is single and $20$ years old. She cannot be claimed as a dependent on anybody else$$s return. She works as a secretary in a local real estate company part$-$time. Her W$-2$ showed compensation of $$15,000$ with Federal income tax withheld of $$50.$

Olivia attended school as a full$-$time student during the spring and fall semesters. Olivia received a $1098-$T with $$8,500$ in Box $1($Tuition$)$ and $$12,000$ in Box $5($Scholarships and Grants$).$ Olivia also paid $$500$ for books. Olivia had a tuition$-$based scholarship for $$6,000$ and a Federal Pell grant of $$6,000.$

She has never taken the American Opportunity Credit in the past since her grants and scholarships exceeded her tuition and book expenses. Her Form $1098-$T reflects her second year of post$-$secondary school. She has not been convicted of a felony, and her earned income is over half of her support. $$

Scenario $1$

Assume Olivia files her tax return using tax software and doesn$$t understand how to maximize her education credit $($Scenario $1$ Baseline Scenario$).$ The tax software automatically reports the excess of scholarships and grants over qualified education expense as gross income.$$

$1.$ For an undergraduate student, which education tax credit generally results in the greatest tax benefit?

a$.$ AOTC

b$.$ LLTC

$2.$ In the baseline scenario, which tax credits does Olivia claim on her tax return?

a$.$ AOTC

b$.$ LLTC

c$.$ EITC

d$.$ None

$3.$ How much federal income tax due $($refund$)($Form $1040$ Line $34/37)$ will she have for the current tax year?

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