The AOTC is only partially refundable. This means if your do not have enough tax liability your credit will be reduced. The refundable portion is $1,000, the other $1,500 is the part that would be reduced. If you look at form 8863, you will see line 8 will show you the refundable portion and line 19 will show you the nonrefundable portion.
American Opportunity Tax Credit.
- Available for the first 4 years of college
- Max amount is $2,500 per student
- Partially refundable credit meaning if your tax liability is $0, 40% (up to $1,000) is refundable
- Be enrolled in a degree or credential seeking program
- Not have a felony drug conviction
- Be enrolled at least half time
- cannot be claimed as a dependent on anyone else's return.
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