United States American Opportunity Tax Credit (AOTC)

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- KIRTI SOLANKI

What is the American Opportunity Tax Credit?

The American Opportunity Tax Credit is a credit for qualified education expenses paid for the first four years of higher education for an eligible student.

How the American Opportunity Tax Credit Work ?

AOTC is a partially refundable credit for undergraduate college education expenses. If the credit nullifies the amount of tax you owe, 40 percent (up to $1,000) of the credit balance may be refunded to you.

Taxpayers can claim AOTC credit for themselves or their dependents and The student must be pursuing a education credential or degree.

Who is Eligible for American Opportunity Tax Credit?

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Which Expenses Qualify for the AOTC ?

Eligible education expenses in American Opportunity Tax Credit include the tuition and certain related costs required to attend an eligible educational institution.

What are the Income Limits for American Opportunity Tax Credit ?

To claim the full AOTC, your modified adjusted gross income (MAGI) must be $80,000 or less and $160,000 or less for married filing jointly.

Eligible students or their parents can claim 100% of the first $2,000 spent on expenses related to educational costs and 25% of the next $2,000. The maximum annual credit per student is $2,500.

How Much is the American Opportunity Tax Credit ?

How to Claim the American Opportunity Tax Credit ?

To claim AOTC, you must complete Form 8863 and attach the completed form to your tax return.
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