3d • 🖊️General discussion
American Opportunity Tax Credit (AOTC): Quick Guide for College Costs
What it is (plain English):AOTC helps with the first four years of college. It’s worth up to $2,500 per student each year, and up to 40% ($1,000) can come back as a refund even if you don’t owe tax. IRS
Who can qualify:
- Student is pursuing a degree/credential and is at least half-time for one academic period that begins in the tax year.
- Student hasn’t finished 4 years of higher education before the year starts and hasn’t claimed AOTC (or Hope) more than 4 total years.
- No felony drug conviction by year-end.
- Income limits: full credit if MAGI ≤ $80k single / $160k MFJ; phases out to $90k / $180k; above that, not eligible. IRS
What expenses count:
- Tuition, required fees, and course materials (books, supplies).
- Doesn’t include room/board, transportation, insurance, or non-required fees. IRS
What you need to claim it:
- Form 1098-T from the school (most students receive this by Jan 31).
- Form 8863 attached to your tax return.
- If a 1098-T is missing, you may still qualify in specific exception cases (e.g., school not required to issue one) and you must be able to prove enrollment and payment.
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American Opportunity Tax Credit (AOTC): Quick Guide for College Costs
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