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American Opportunity Tax Credit (AOTC)
The American Opportunity Tax Credit is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. The AOTC can be claimed for expenses incurred for tuition, certain fees, and course materials needed for attendance or enrollment.
Eligibility Criteria
| Eligibility Requirement |
Description |
| Student Status |
The student must be pursuing a degree or other recognized education credential and be enrolled at least half-time for at least one academic period beginning in the tax year. |
| Income Limits |
The credit is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). |
| Qualifying Expenses |
Expenses that qualify for the AOTC include tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. |
| Number of Tax Years |
The credit can be claimed for a maximum of four tax years per eligible student. |
| Felony Drug Conviction |
Students with a felony drug conviction are not eligible for the AOTC. |
Claiming the AOTC in TurboTax
- Log in to your TurboTax account and select the current year's tax return.
- Navigate to the 'Deductions & Credits' section.
- Scroll down to the 'Education' section and select 'Show more'.
- Click 'Start' next to 'Education Expenses (Form 1098-T)'.
- Follow the on-screen prompts to enter information from your Form 1098-T and any other qualifying educational expenses.
- TurboTax will calculate your credit based on the information provided and determine if you are eligible for the AOTC.
- If eligible, TurboTax will include the credit in your tax return and provide instructions on how to complete the process.
Additional Information
The AOTC is worth up to $2,500 per eligible student. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.
It is important to maintain records of the student's enrollment status and to keep receipts and documentation for all qualifying educational expenses. This documentation will be necessary should the IRS request proof of eligibility for the AOTC.
For more detailed information or assistance with claiming the American Opportunity Tax Credit, it is advisable to consult with a tax professional or utilize the resources provided by the IRS and your tax preparation software.
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