Question: I’ll have two children in college this year – my daughter is starting her junior year, and my son will be a freshman. Can I take the American Opportunity Credit for expenses for both of them?
Answer:
Yes, as long as you meet the income requirements. The American Opportunity Credit is worth up to $2,500 per student for each of his or her first four years of college. It’s calculated as 100% of the first $2,000 paid toward a student’s eligible expenses plus 25% of the next $2,000 spent. Eligible expenses include tuition, required fees and course materials. Room and board don’t count.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The student must be enrolled at least half-time in a program that leads to a degree, certificate or other recognized education credential.
To qualify for this credit in 2017, your adjusted gross income must be less than $180,000 if you’re married and file taxes jointly, or $90,000 if you file as single or head of household. The amount of the credit starts to phase out for joint filers who earn more than $160,000, and single filers or heads of household who earn $80,000.
You can claim the credit by filing IRS Form 8863 with your tax return. For more information, see Instructions for Form 8863.
Students who go to school less than half-time, are in graduate school or take other eligible courses may qualify for the Lifetime Learning Credit. The credit is worth 20% of the first $10,000 spent on eligible expenses for the year – or a maximum of $2,000 per tax return (not per student.) There is no limit on the number of years you can take this credit, but you can’t claim both the American Opportunity Credit and the Lifetime Learning Credit for the same student in the same tax year.
To qualify, your adjusted gross income must be less than $132,000 for joint filers, or $66,000 for single filers and heads of household. The amount of the credit starts to phase out if you earn more than $112,000 if married filing jointly or $56,000 for single filers.
For more information about the rules, see IRS Publication 970 Tax Benefits for Education.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Premium Tax Credit: Are You Eligible For This Health Insurance Tax Break?Tax Credits The tax credit can help qualifying individuals pay for coverage from the Affordable Care Act’s health insurance marketplace.
-
IRS: Here’s How to Recover Your Tax Records After a Natural DisasterTax Records Your tax documents can help you get federal relief faster, the IRS says.
-
Voters Approve New Veteran Property Tax ReliefTax Relief Thanks to the election, some Veterans will soon see expanded property tax exemptions.
-
Nevada Approves Diaper Tax Relief Amid Childcare CrisisTax Relief Nevada voters have expanded sales tax relief to diapers. But are prices still too high?
-
Earned Income Tax Credit (EITC) 2024: How Much Will You Get?Tax Credits The refundable amount for workers with or without children is slightly higher this year. Here’s what you need to know.
-
Five Cities With the Lowest Property Tax in the U.S.Property Tax Property taxes are ultra-low in these popular metro areas, but is housing affordable?
-
IRS Expands Tax Breaks for Breast Cancer Screenings, ContraceptivesHealthcare Now you can get a tax deduction or reimbursement for certain medical expenses, like over-the-counter birth control and condoms.
-
Colorado Sending Billions in TABOR RefundsState Tax Are you receiving a TABOR refund with your 2025 Colorado state income tax filing? Don’t miss the deadline.
