Why is my American Opportunity Credit $430 this year when it was $2375 last year?

[hopp1n]

My taxable income is still under $150000 and my children are a senior and junior in college

[SharonD007]

Did your children receive scholarships or grants that may have reduced their qualified education expenses? Look in box 5 of your children's Form 1098-T to check for scholarships that will reduce their qualified education expenses. We can't answer why your credit is the amount it is without seeing your entries on your tax return.

The amount of the American Opportunity Credit is 100% of the first $2,000 of qualified education expenses that you paid and 25% of the next $2,000 of qualified education expenses that you paid. Qualified education expenses are reduced by scholarships and grants.

For more information, refer to the TurboTax articles What Is the American Opportunity Tax Credit? and How do Education Tax Credits Work?

[Hal_Al]

It only takes $4000 of tuition and other qualified expenses to get the full $2500 American Opportunity Credit (AOC). And you have 2 students, the max is $5000 for $8000 of expenses. 

The fact that you only got $2375 last year says you are lower than average on expenses.  Compare this year's form 8863 to last year's. 

If your students are on scholarship (box 5 of the 1098-T), there may be a loop hole that allows you to still claim a full tax credit.  For more help, provide more info, particularly what's on the 1098-Ts

[ntax0]

Hi hopp1n,

If you use this tax strategy, you can claim the full credit. Watch this video and please give this thread by Hal_AI a thorough read.

The strategy essentially allows you to count a portion of the income the government would otherwise consider to be tax-free as income. Note that the terms of the tax-free scholarship must permit the tax-free funds to be counted toward educational or noneducational expenses. 

https://www.youtube.com/watch?v=PgcR8HmwD2c&t=671s

https://ttlc.intuit.com/community/college-education/discussion/as-a-student-independent-i-am-eligibl...