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What is the American Opportunity Tax Credit? This is a tax credit that will help parents and students pay for college expenses. Under the American Recovery and Reinvestment Act (ARRA), more parents and students will qualify for this tax credit.

The Hope Credit

The American Opportunity Credit modifies the existing Hope Credit. This actually makes the Hope Credit available to even more taxpayers and includes many with higher incomes. You may not owe tax at all and some of these credits also apply to you as well.

Course Materials

This new credit has added more course materials to the list of qualifying expenses. Here’s some more good news. The credit can be claimed for four post secondary education years instead of two.

The best time to go back to school is during an economic recession. How many times have you heard that saying? The annual maximum credit is $2,500 per student for those who are eligible to qualify. This is a $700 increase from the Hope Credit.

 The Full Credit

If your Adjusted Gross Income is $80,000 or less ($160,000 for married couples filing a joint return) then you will be eligible for the full credit. If your income exceeds those limits then, hey, you can afford to pay for the college expenses yourself right?

I guess that’s what the creators of this credit were thinking because once you pass those financial limits then the credit is phased out for those taxpayers.

More Information Please

If you are interested in the full publication about the American Opportunity Tax Credit you can read Publication 970 which is an IRS Publication. You can read all about tax education benefits. If the thought of that instantly puts you to sleep then you can use an online tax return software company that will find tax credits for you.

Tax Preparation Software

I don’t know about you but, I certainly don’t want to spend my time reading tax publications. I would much rather sit down in the comfort of my home and let the software search for all of my tax credits for me. If you would like to use tax preparation software to calculate your education tax credits then you should try TurboTax Online.

Don’t Lose Your Credits

Many taxpayers miss out on deductions and credits they could have claimed. Don’t fall into that category. Get started today! You can always try for free! You don’t have to pay unless you print or e-file. Why don’t you give it a try and see what they can do for you?