Taking credit for going to college
February 05, 2020
If you are a college student, there is more than one way to get credit for your studies.
The American Opportunity Tax Credit includes expenses for course-related books, supplies, and equipment that are not necessarily paid to the educational institution. It is a tax credit of up to $2,500 of the cost of tuition, fees, and course materials paid during the taxable year. Also, 40 percent of the credit (up to $1,000) is refundable. This means you can get it even if you owe no tax.
Although the student or parent must file a tax return to get the credit, the credit is one way to help reduce the cost of postsecondary education.
For the American Opportunity Tax Credit, an eligible student is a student who:
- is enrolled in a program leading toward a degree, certificate, or other recognized postsecondary educational credential
- has not completed the first four years of postsecondary education as of the beginning of the taxable year
- enrolled at least half time for at least one academic period beginning in the tax year
- has not been convicted of a felony drug offense.
- has not claimed the AOTC or the former Hope credit for more than four tax years
In general, qualified expenses for the education tax credits include tuition and required fees for the enrollment or attendance at an eligible postsecondary educational institution. To be creditable, the expenses paid during a taxable year must relate to: (1) an academic period that begins in the same taxable year; or (2) an academic period that begins in the first three months of the following taxable year. See Publication 970, Tax Benefits for Education.
Generally, a taxpayer whose modified adjusted gross income is $80,000 or less ($160,000 or less for joint filers) can claim the credit for the qualified expenses of an eligible student. The credit is reduced if a taxpayer's modified adjusted gross income exceeds those amounts. A taxpayer whose modified adjusted gross income is greater than $90,000 ($180,000 for joint filers) cannot claim the credit.
Mapping Your Future provides this information as a resource and recommends that you contact a qualified tax advisor or visit the Internal Revenue Service website for more information.