American Opportunity Credit

The American Opportunity Credit provides a family up to a $2,500 maximum tax credit per year per eligible student. You may claim it for four years, if you:

  • have not completed the first four years of postsecondary education.
  • are enrolled in a program that leads to a degree, certificate, or other recognized educational credential.
  • are taking at least half the normal full-time course load for your major for at least one academic period beginning during the calendar year.
  • are free of any federal/state felony conviction for possessing or distributing a controlled substance.

The American Opportunity Credit covers 100% of the first $2,000 in payments for qualified tuition and fees and 25% of the second $2,000. Expenses that qualify for the American Oppportunity Credit include school tuition and required fees, minus any tax-free grants or scholarships. The costs of books and supplies are usually not covered, but you should check with your school. This tax credit does not cover room and board, insurance, transportation, or medical fees.

To claim the American Opportunity Credit, taxpayers must file using federal tax Form 1040 or 1040A and attach Form 8863 (Education Credits); however, itemizing deductions is not a requirement.

Visit the IRS Web site for additional Tax Benefits for Education information.