AOTC (American Opportunity Tax Credit)
A tax credit of up to $2,500 per eligible student for qualified education expenses during the first four years of post-secondary education.
The American Opportunity Tax Credit (AOTC) provides up to $2,500 per eligible student per year for qualified education expenses including tuition, fees, and course materials. The credit is calculated as 100% of the first $2,000 plus 25% of the next $2,000 in expenses. 40% of the credit (up to $1,000) is refundable. The student must be enrolled at least half-time and be in the first four years of post-secondary education. The credit phases out for single filers with MAGI between $80,000 and $90,000 ($160,000 to $180,000 for married filing jointly). Married filing separately filers cannot claim the AOTC.
Related Terms
Education Credits
Tax credits for higher education expenses. The American Opportunity Credit is worth up to $2,500 per student for the first four years; the Lifetime Learning Credit is up to $2,000 per return.
LLC (Lifetime Learning Credit)
A non-refundable tax credit of up to $2,000 per tax return for qualified tuition and education expenses.
Adjusted Gross Income (AGI)
Your gross income minus specific adjustments such as student loan interest, IRA contributions, and self-employment tax. AGI is the starting point for calculating your taxable income.
Filing Status
Your tax classification based on marital and family situation — Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Surviving Spouse.