American Opportunity Tax Credit

Is a credit to help parents and college students offset the cost of college.

  • Available: until the end of 2017 - Congress has approved a 5 year extension as part of the tax deal package on January 1st 2013.
  • Claimed by: eligible taxpayers for college expenses.
  • Claimed for: qualified tuition and related expenses paid for higher education including tuition, related fees, books and other required course material for any of the first four years of post-secondary education.
  • Amount to claim:
    100% of the first $2,000 spent per student per year
    25% of te next $2,000
    The full $2,500 credit may be available to a tax payer who pays $4,000 or more in qualifying expenses for an eligible student.
  • Full credit available for tax year 2014: eligible taxpayers earning less than $90,000 or $180,000 for married couples filing a joint return. The credit is gradually reduced for taxpayers with higher incomes.
  •  Not to claim for: taxpayers who claim the tuition and fees tax deduction in the same year, or the Lifetime Learning Credit. You must choose the most beneficial for you between the three.
  • How to claim: using Form 8863, attached to Form 1040 or 1040A

Read on more about the American Opportunity Tax Credit