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:
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.