The maximum credit is $2,500 for qualified tuition and related expenses for each eligible student. The American Opportunity Tax Credit reduces the amount of federal individual income taxes you may have to pay. A portion of the American Opportunity Tax Credit, 40 percent, is refundable even if you do not have a tax liability.
The amount of your American Opportunity Tax Credit is phased out (gradually reduced) if your modified adjusted gross income is between:
- $80,000 and $90,000 if you file as a single taxpayer, or
- $160,000 and $180,000 if you file a joint tax return.
You cannot claim an American Opportunity Tax Credit if your modified gross income is $90,000 or more ($180,000 or more if you file a joint return).
You can claim the American Opportunity Tax Credit for the first four years of an eligible student's postsecondary education when the student is enrolled at least half time in a program that leads to a degree, certificate, or other recognized educational credential for one academic period. Generally, you can claim the American Opportunity Tax Credit if you pay qualified tuition and related higher education expenses for an eligible student who is either yourself, your spouse, or a dependent for whom you claim an exemption on your federal tax return. You cannot claim the American Opportunity Tax Credit if your tax filing status is married filing separately.
Qualified tuition and related expenses are tuition and fees required for enrollment or attendance at an eligible education institution and course materials defined as books, supplies and equipment needed for a course of study. You must reduce the qualified expenses by the amount of any tax-free educational assistance you received.
Eligible Educational Institutions
Eligible educational institutions are any college, university, vocational school or other postsecondary educational institution eligible to participate in student aid programs administered by the United States Department of Education.
Compatibility with Other Tax Benefits for Higher Education
You may be able to claim a American Opportunity Tax Credit in the same year in which you received a distribution from either a Coverdell Education Savings Account (ESA) or a Qualified Tuition Program (QTP), but you cannot use expenses paid with a distribution from either a Coverdell ESA or a QTP as the basis for the American Opportunity Tax Credit. You cannot claim the American Opportunity and Lifetime Learning Tax Credits for the same student in the same year.