Do you have any students in your family, or are you a student yourself? If so, then the American Opportunity Tax Credit may help you decrease your tax obligations. Like the old Hope Credit, you can claim this new tax credit for tuition and certain fees you pay for higher education either last year. But there have been some changes to the benefit of students and those who claim students.
Below is a list of the new changes for the American Opportunity tax credit.
Higher Amount You can Claim
The new American Opportunity tax credit limit is $2,500.
New Definition for Tuition and Qualified Expenses
Tuition is still covered for the American Opportunity tax credit, but now course materials are also covered, which include books, supplies and equipment needed for a course of study whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance.
Refundable Tax Credit
Unlike the Hope Credit, you can now get up to $1,000 of the tax credit refunded to you by Uncle Sam or 40% of it; this will make a difference to lower-income taxpayers who owe smaller amounts of taxes.
Help for Middle and Higher Income Earners
Phaseout begins at $80,000 for single filers, or $160,000 for married joint filers.
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