The American Opportunity Tax Credit (AOTC) is a tax credit that helps eligible students and their families pay for college. The credit is worth up to $2,500 per eligible student and is available for the first four years of a student's post-secondary education. To be eligible for the AOTC, a student must be pursuing a degree or other recognized education credential, be enrolled at least half-time for at least one academic period beginning during the tax year, and not have completed the first four years of post-secondary education as of the beginning of the tax year.
The AOTC can be used to offset the cost of tuition, fees, and certain course materials, such as books and supplies. Additionally, the credit is partially refundable, meaning that if the credit exceeds the amount of tax owed, the taxpayer may receive up to 40% of the remaining credit, or $1,000, as a refund. The AOTC is an important tool for helping families afford the cost of college. The average cost of tuition and fees at a four-year public college is over $10,000 per year, and private colleges can cost over $30,000 per year. The AOTC can help families offset a significant portion of these costs. The credit can be claimed on the taxpayer's annual federal income tax return, either by the student or the student's parents. To claim the credit, the taxpayer will need to provide information about the student, such as the student's name, Social Security number, and the name and address of the school they are attending.
The American opportunity tax credit is a valuable benefit for students and their families, it helps to reduce the financial burden of paying for college, which is a necessary step in achieving the American Dream. It is important to check the eligibility and the claim process, and to keep the records to claim the credit on the tax return. Reach out today to find out if you are eligible for the credit on your higher education costs.