If you’re a parent helping your child pay for college, there’s good news waiting for you this tax season. The American Opportunity Tax Credit (AOTC) allows eligible parents to claim up to $2,500 per student, per year, for qualified education expenses. This powerful credit can significantly reduce what you owe—or boost your refund. Yet, many families leave this money on the table simply because they didn’t know they qualified. This year, make sure you take full advantage.
What Is the American Opportunity Tax Credit?
The AOTC is a federal tax credit designed to ease the cost of higher education. It allows eligible parents to claim up to $2,500 per student for expenses like tuition, required course materials, and school fees. Even better—40% of the credit (up to $1,000) is refundable, meaning you can get money back even if you owe no taxes.
This credit applies only to the first four years of post-secondary education and must be for a degree-seeking student enrolled at least half-time. The student must attend an eligible college or university, and the parent or student must have a valid Social Security number.
Who Can Claim the Credit?
To qualify, the student must be listed as a dependent on your tax return. Your modified adjusted gross income (MAGI) must be below $90,000 for single filers or $180,000 for joint filers to receive the full credit. If your income exceeds that, the credit phases out gradually.
You can claim the AOTC for multiple students in your household, as long as they meet the criteria. However, each student can only receive the credit for a maximum of four years, and you cannot double-dip by claiming the same expenses for other education credits or deductions.
How to Claim the Credit This Tax Season
Claiming the AOTC is simple when you file your federal tax return. You’ll need Form 8863, which is specifically used to calculate education credits. To complete it, use the 1098-T form sent by your child’s college, which details tuition paid and scholarships received.
Make sure to keep receipts for books, supplies, and fees, as these may also count toward the credit. Using tax software or working with a tax preparer can help ensure you claim the correct amount and don’t miss out due to common mistakes.
Don’t Miss Out on $2,500 Per Student
The American Opportunity Tax Credit is one of the most generous education benefits available to parents—and it can make a real difference in managing college costs. Whether you owe taxes or expect a refund, this credit could add thousands of dollars to your family’s bottom line. This tax season, be proactive: gather your paperwork, understand the rules, and file with confidence. Your college investment deserves every dollar in return.
FAQ’s:
1. What expenses qualify for the AOTC?
Qualified expenses include tuition, enrollment fees, and required course materials like books and supplies.
2. Can I claim the credit if my child has a scholarship?
Yes, but you can only claim expenses not covered by the scholarship. Check your 1098-T for accurate figures.
3. Can I claim the AOTC every year?
Yes, but only for four tax years per eligible student, and only during their first four years of higher education.
4. Is the credit refundable?
Up to $1,000 of the AOTC is refundable, meaning you can receive it even if you don’t owe taxes.
5. What if I miss claiming the credit this year?
You can file an amended return within three years to retroactively claim the credit if you were eligible.