The American Opportunity Tax Credit is a federal program that provides up to $2,500 a year to help offset the cost of your tuition, fees, books, and supplies during your first four years of college. Talk with a tax professional or visit the Internal Revenue Service website at Tax Credit for details, but here are the basics.
How do I qualify?
Taxpayers with a modified adjusted gross income of $80,000 or less ($160,000 or less for joint filers) are potentially eligible for the full credit and the credit is reduced ratably up for modified adjusted gross incomes up to $90,000. To claim the credit you, or the person who claims you as a dependent (e.g. a parent or guardian), must use the Internal Revenue Service (IRS) Form 8863 available on the IRS website.
How do I claim the credit?
If your parents claim you as dependent on their tax return, be sure to give them the IRS “Tuition Statement” Form 1098-T that the College will send you in the mail, early in each new calendar year. If you file your own taxes, your tax preparer or tax filing software will guide you through the process using the 1098-T and the IRS Form 8863.
How much will I get?
Taxpayers will receive a tax credit based on 100 percent of the first $2,000 of tuition, fees and course materials paid during the taxable year, plus 25 percent of the next $2,000 of tuition, fees and course materials paid during the taxable year. The maximum credit is $2,500.
What educational expenses qualify?
Qualifying expenses include tuition, books, supplies and equipment needed for a course of study. Out-of-pocket payments for tuition, fees, required textbooks, course materials, and supplies qualify.
My parents have two children in college. Can they claim the credit for both of us?
Yes, as long as both students are undergraduates enrolled at least half time at an eligible institution and in their first four years of a program leading to a degree or certificate.
For more information:
Internal Revenue Service (American Opportunity Tax Credit: