The maximum American Opportunity Tax Credit (AOTC) you can claim is $2,500 per eligible student per year. This credit is designed to help offset the cost of higher education expenses.IRS+5H&R Block Tax preparation company+5TurboTax+5
๐ฐ How the AOTC is Calculated
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100% of the first $2,000 of qualified education expenses, plus
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25% of the next $2,000 of qualified expensesIRS+4H&R Block Tax preparation company+4TurboTax+4
So, if you spend $4,000 or more on qualified education expenses, you can receive the full $2,500 credit.IRS+8H&R Block Tax preparation company+8Investopedia+8
๐ Refundable Portion
Up to 40% of the AOTC is refundable, meaning you could receive up to $1,000 as a refund even if you owe no tax. The remaining 60% can reduce any tax you owe to zero but won't result in a refund. IRS+2TurboTax+2Investopedia+2
๐ค Eligibility Criteria
To qualify for the AOTC, the student must:
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Be pursuing a degree or recognized education credential
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Be enrolled at least half-time for at least one academic period during the tax year
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Not have completed the first four years of higher education at the beginning of the tax year
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Not have claimed the AOTC for more than four tax years
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Not have a felony drug conviction at the end of the tax year TurboTax+9IRS+9IRS+9
๐ต Income Limits
The AOTC is subject to income limits:
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Single filers: Credit phases out between $80,000 and $90,000 of modified adjusted gross income (MAGI)
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Married filing jointly: Credit phases out between $160,000 and $180,000 of MAGIIRS+4Investopedia+4TurboTax+4TurboTax
Taxpayers with MAGI above these ranges are not eligible for the credit. Investopedia