The American Opportunity Credit is a tax credit of up to $2,500 for eligible undergraduate expenses. Forty percent of the credit is refundable, which means you can still claim part of the credit even if you have little or no tax liability.

This video is a rundown of who qualifies for the credit, how it is calculated, and how the credit is reported on the tax return.

The video follows Robert and Laura and their college student son Richard, through various scenarios illustrating how the American Opportunity Credit works.

2022 UPDATE:

The AGI phaseouts for the American Opportunity Credit for 2022:
(S, HOH, QSS) $80,000 $90,000
(MFJ) $160,000 $180,000

ADDTIONAL RESOURCES:

IRS Publication 970: "Tax Benefits for Education": https://www.irs.gov/pub/irspdf/p970.pdf

IRS Form 1098T: "Tuition Statement": https://www.irs.gov/pub/irspdf/f1098...

IRS Form 8863: "Education Expenses": https://www.irs.gov/pub/irspdf/f8863...


Intro and background music: “Bluesy Vibes” Doug Maxwell YouTube Audio Library

DISCLAIMER:

The information presented in this video is for informational and educational purposes only, and is not intended to render tax advice for specific situations. If you have questions about your specific tax situation, please consult the resources linked above or consult with a qualified tax professional in your community.

The information contained in this video is based on tax law and IRS regulations as of the date of publication, and may be subject to change.