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: eligible taxpayers earning less than$80,000 or $160,000 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 IRS.gov more about the American Opportunity Tax Credit