The American Opportunity Tax Credit (AOTC) allows eligible taxpayers to claim a credit for qualified education expenses paid for an eligible student for the first four years of higher education. For the tax year 2023, the maximum amount of the AOTC is $2,500 per eligible student.
Here's a breakdown of the credit:
- Amount: The maximum annual credit is $2,500 per eligible student.
- Qualifying Expenses: The credit can be claimed for qualified expenses, which include tuition, fees, and course materials required for attendance.
- Refundable Portion: If the credit brings the tax liability to zero, up to 40% of the remaining credit (up to $1,000) is refundable, meaning it can result in a refund even if no tax is owed.
To qualify for the AOTC, the student must be enrolled at least half-time in a degree or certificate program at an eligible institution and must not have completed the first four years of post-secondary education before the tax year. There are also income limitations that may affect eligibility.
For the most accurate and personalized information on tax credits, it’s recommended to consult with a tax professional or refer to the IRS guidelines.
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