If a taxpayer claiming the American Opportunity Tax Credit has their tax liability reduced to zero, what is the maximum amount they may receive as a refundable credit?

Answer 1

If a taxpayer claiming the American Opportunity Tax Credit (AOTC) has their tax liability reduced to zero, they can receive up to 40% of the AOTC as a refundable credit. The maximum AOTC is $2,500 per eligible student, which means the taxpayer can receive a maximum refundable amount of up to $1,000 (which is 40% of $2,500) if their tax liability is zero.