Their tax liability for the tax year is $1,000. Steve and Carol pay $8,000 in eligible education expenses during the tax year for their daughter’s junior year in college. Let’s review an example to see this in action: If you don’t have a tax liability for the year, you can get up to 40% ($1,000) back. 25% of the next $2,000 of qualified expensesĪs mentioned above, the American Opportunity Tax Credit is refundable.100% of the first $2,000 of qualified expenses and.If you’re an eligible student, you can apply the AOTC to: The expense calculations are broken into two parts. Instead of applying the credit directly to $2,500 of qualified expenses, the American Opportunity Credit rules work slightly differently. However, the same tuition expenses may not be used to claim any of the other education tax credits, deductions or exclusions.
On top of tuition and fees, books and supplies (including a computer) count as eligible school expenses. Have other student tax filing questions? Be sure to visit our Tax Guide for College Students and find out about student forms that can be filed for free. We’ll get into those specifics a little later. That means if you’ve paid your applicable taxes and there’s some of the credit left over, you could receive money back as a refund. What’s more, the American Opportunity Credit is partially refundable.
