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For tax years 2009 and 2010, taxpayers may be eligible to claim a refundable American Opportunity Credit against their federal income taxes for the qualified tuition and related expenses of each student in the taxpayer’s family (i.e. the taxpayer, the taxpayer’s spouse, or an eligible dependent) who is enrolled at least half-time in a post-secondary program leading to a degree, certificate, or other recognized educational credential. The amount that may be claimed as a credit is generally equal to: (1) 100% of the first $2,000 of the taxpayer's out-of-pocket expenses for each student’s qualified tuition and related expenses, plus (2) 25% of the next $2,000 of the taxpayer's out-of-pocket expenses for each student's qualified tuition and related expenses. Thus, the maximum credit a taxpayer may claim for a taxable year is $2,500 multiplied by the number of students in the family who meet the enrollment criteria.
A taxpayer who pays qualified tuition and related expense and whose federal income tax return has a modified gross income of $80,000 or less ($160,000 or less for joint filers) is eligible for the credit. The American Opportunity Credit is ratably reduced for taxpayers who have modified adjusted gross income between $80,000 and $90,000 ($160,000 and $180,000 for joint filers) Taxpayers with modified adjusted gross income over $90,000 ($180,000 for joint filers) may not claim the American Opportunity Credit. See www.irs.gov/newsroom/article/0,,id=211309,00.html for additional information.
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