The American opportunity tax credit (AOTC) is a federal education tax credit for qualifying student costs paid throughout the first four years of higher education. The maximum annual benefit per eligible student is $2,500. If the credit reduces your liability to zero, you may get 40% of any remaining credit amount (up to $1,000). The AOTC is available to taxpayers with modified adjusted gross incomes (MAGI) of less than $80,000 ($160,000 for married couples filing jointly).
To claim the AOTC, taxpayers must complete IRS Form 8863 and file their taxes. The credit can be applied to tuition and related expenses, such as books and course materials.
Eligible expenses for the AOTC include:
-Tuition and fees required for enrollment in a degree or certificate program
-Course-related expenses, such as books, supplies, and equipment
-Expenses for special needs services required for enrollment or attendance