American opportunity credit

[LeonardS]

The American Opportunity Credit. 

• The American Opportunity Credit applies only to the first four years of post-secondary school education (university, college, vocational school, nonprofit and for-profit institutions)
• You can claim up to $2,500 per eligible student, per year.
• The credit covers 100% of the first $2,000 of qualified tuition, required fees, and qualified expenses, plus 25% of the next $2,000.
• 40% of the credit is refundable, so you may receive $1,000 per eligible student as a tax refund even if you owe no tax.
• Each student for which you claim the credit must have been enrolled at least half-time for at least one academic period which began during the 2020 Tax Year when filing in 2021.
• For Tax Year 2020, the limit on modified adjusted gross income (MAGI) is $180,000 if Married Filing Jointly and $90,000 if Single, Head Of Household, or Qualifying Widow(er). ($160,000 and $80,000 for Tax Year 2018, which can be claimed if a tax amendment is filed). This means you can not claim the credit if your MAGI is over $90,000 ($180,000 for Married Filing Jointly). Not sure what your filing status is? Use the eFile.com STATucator tool to determine your status by answering a few simple questions.
• You may claim the credit for education expenses you paid for yourself, your spouse, or your dependent.  You may not take the credit for yourself if you are claimed as someone else's dependent.
• Qualified expenses include tuition and required fees, books, supplies, equipment, and other required course materials (but not room and board).
• Any felony drug convictions by the end of the tax year disqualify the student from receiving the American Opportunity Credit.

[stantonporsche]

my son will be filing independently this year, that is, no one is claiming him as a dependent

so he should qualify since he made less than 9K on his summer job last year..

previous year, he did not file tax and I filed him under my taxes so he was a dependent

we did not qualify because I made too much money..

hence, hopefully he will qualify this year...

where I turbo tax do you enter this American opportunity credit information?

for filing simple taxes, should be able to do this in free version as well, right?

[RaifH]

If your son is under the age of 24, you would still be eligible to claim him as a dependent if you provide more than half his living expenses. 

However, you do not have to claim him, and if you choose not to, he can still claim the American Opportunity Credit. However, he would have to mark that he can be claimed as a dependent. For your son to claim the American Opportunity Credit, he will need his 1098-T furnished by his school:

1. In the Federal > Deductions & Credits section of your return, scroll down to Education and click Show more. 
2. Click Start/Revisit next to Expenses and Scholarships (1098-T).
3. Enter your 1098-T
4. Go through the rest of the questionnaire. If he meets all the requirements, he will receive the credit. 

If he does not have enough taxable income to have to pay taxes in 2021, he will still receive $1,000 of the American Opportunity Credit. That is the refundable portion. 

The American Opportunity Credit requires TurboTax Deluxe.

[eulondagarry]

My husband and I are claiming my son but the loan is in my sons name.  Do we apply the American opportunity credit or does my son?

[PattiF]

You would receive the American opportunity credit as long as you are claiming your son as a dependent and the qualifications to claim the credit are met.

Qualifications for claiming the American Opportunity Tax Credit are:

• You paid an eligible student's qualified education expenses for higher education at any college, university, or vocational school with a student aid program administered by the US Department of Education.
• The eligible student is you, your spouse, or a dependent on your return.
• For the full credit, your MAGI (modified adjusted gross income) is less than $90,000 ($180,000 if you're filing jointly).
  • For a reduced credit, your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you're filing jointly).

An eligible student is defined as a student who:

• Is enrolled at least half-time in a program leading to a degree, certificate, or other recognized credential.
• Had at least one academic period beginning during the year.
• Didn't claim the American Opportunity Tax Credit for more than three previous years.
• Didn't complete the first four years of post-secondary education before the beginning of the year.

The American Opportunity Tax Credit cannot be claimed on Married Filing Separately returns nor under any of these conditions:

• The student is a dependent on someone else's return.
• The student is a nonresident alien (unless the student's spouse is a resident and they file a joint return treating both as residents, or the parents claim the student as a dependent on their joint return).
• The student had a felony drug conviction.