American Opportunity Credit for Education

The American Opportunity Credit is for education expenses of an eligible student who is a taxpayer, spouse or dependent(s).

The maximum credit amount is $2,500 per eligible student.

  • 100% of the first $2,000 of qualified education expenses
  • 25% of the next $2,000 of qualified education expenses

Qualified expenses are tuition, fees, and course materials required for enrollment or attendance at an eligible educational institution.    An eligible educational institution is any college, university, vocational school, or any other post secondary educational institution.  They include almost all accredited post secondary schools.  Qualified expenses also include student activity fees if the fees must be paid as a condition of enrollment, books, supplies, and equipment needed for a course of study.

An eligible student is as follows:

  • Student has not already claimed the American Opportunity Credit in at least four prior tax years.
  • Student has not completed the first four years of post secondary undergraduate education before the tax year as determined by the educational institution.
  • For at least one academic period beginning during the tax year, the student was enrolled at least half time in a program leading to a degree, certificate, or other recognized educational credential.
  • The student had no federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year.

The American Opportunity Credit also has restrictions as follows:

  • Income limit for 2015 is modified AGI between $80,000 and $90,000($160,000 and $180,000 MFJ).  These amounts are adjusted for inflation each year.
  • No credit is allowed if:
    • Filing status is Married Filing Separately
    • Taxpayer is claimed as a dependent on another person’s tax return
    • The taxpayer or spouse is a nonresident alien for any part of the year who did not elect to be treated as a resident alien for tax purposes
    • Taxpayer generally cannot claim more than one education benefit for the same qualifying education expense.

If you would like to learn more about this tax strategy, please call Susan at 847.895.9880

 

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