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American Opportunity Credit

Taken from IRS Pub 970 Chapter 2 Overview of Education Tax Benefits for Tax Year 2009

Maximum credit

Up to $2,500 credit per eligible student

Limit on modified adjusted gross income (MAGI)

$180,000 if married filling jointly; $90,000 if single, head of household, or qualifying widow(er)

Refundable or nonrefundable

40% of credit may be refundable; the rest is nonrefundable

Number of years of postsecondary education

Available ONLY for the first 4 years of postsecondary education

Number of tax years credit available

Available ONLY for 4 tax years per eligible student (including any year(s) Hope credit was claimed)

Type of degree required

Student must be pursuing an undergraduate degree or other recognized education credential

Number of courses

Student must be enrolled at least half time for at least one academic period that begins during the tax year

Felony drug conviction

No felony drug convictions on student’s records

Qualified expenses

Tuition and fees required for enrollment. Course-related books, supplies, and equipment do not need to be purchased from the institution in order to qualify.

Payments for academic periods

Payments made in 2009 for academic periods beginning in 2009 and in the first 3 months of 2010

Who Can Claim the Credit

Generally, you can claim the American opportunity credit if all four of the following requirements are met.

  • You pay qualified education expenses of higher education.
  • You pay the education expenses for an eligible student.
  • The eligible student is either yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.
  • You choose not to claim the Hope credit for any student in 2009.