American Opportunity Credit

American Opportunity Credit

A tax credit in the United States making a dollar-for-dollar reduction in the tax liability of a postsecondary student equivalent to 100% of tuition and education fees, up to $2,500. Up to 40% of the credit is a refundable tax credit. Certain income limits apply to a student's eligibility. It was instituted in 2009 and is scheduled to expire in 2012.
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Depending on the criteria, a student may use the American Opportunity Credit of up to $2,500 or the Lifetime Learning Credit of up to $2,000.
In the past, there have been erroneous education claims, particularly with respect to the refundable portion of the American Opportunity Credit.
American opportunity credit is a per-student, partially-refundable tax credit.
Tip #10: Take advantage of the American Opportunity Credit (AOTC).
Among the others: the lifetime learning credit or the American Opportunity Credit.
There are two types of credits: the American Opportunity Credit, which is available through 2017 and is limited to the first four years of post-secondary education, and the Lifetime Learning Credit which provides credit for years after the first four years of post-secondary schooling and can be used for graduate studies.
Current refundable tax credits for individuals include the additional child credit, the earned income credit, the health coverage credit, and the American opportunity credit.
The Lifetime Learning Credit and the American Opportunity Credit, which is for degree or certificate programs only but allows up to $2,500 per student, per year, for the first four years of undergraduate school, cannot be claimed by the same person.
Students who attended school at least half time in 2012 may be eligible for the American Opportunity Credit that can amount to $2500.
In contrast, several tax credits intended for low-income families -- such as the Child Tax Credit, the Earned Income Tax Credit and the American Opportunity Credit -- were only extended for five years until 2017, something Greenstein described as "appalling.
Education credits such as the American Opportunity credit cover the first $2,000 of tuition and related costs and 25 percent of the next $2,000 of expenses.
Therefore, the American Opportunity credit remains the primary tax credit available for higher education in 2011 and 2012.

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