AOA

American Opportunities Act

Requirements

1. Cannot be a dependent and cannot be eligible to be a dependent even if not claimed.
2. Must have a form 1098-T^* with the school’s EIN.
3. Student must have TIN by due date of return.
4. Not completed first four years of post-secondary education.
5. Enrolled at least half time for at least one semester in year.
6. Enrolled in program leading to degree or other credential from an accredited institution.
7. No felony drug convictions.

Qualifying Expenses

1. Tuition and Required Fees
2. Books, supplies, equipment if required for enrollment or attendance by everyone in the program.

Non-qualifying Expenses

1. Room and Board.
2. Transportation.
3. Medical Insurance.

Subtract from costs

1. Any non-taxable assistance received, other than gifts and inheritances
2. Tax-free scholarships or fellowships.
3. Tuition grants from an employer.
4. Federal Pell grants.
5. Refunds from the school.

Calculation of Credit

1. One credit per eligible student per return per year. If the Lifetime Learning Credit is used for a student, that student may not also apply for the American Opportunities Credit.
2. 100% of first $2,000 of qualified expenses.
3. 25% of expenses in excess of $2,000 to maximum of $4,000 in expenses and $2,500 of credit.

40%, up to $1,000, of the credit may be Refundable unless:

1. Person claiming credit is under age 18 OR
2. Person claiming credit is 18 at the end of the year and their earned income was less than one-half of their own support OR
3. Person claiming credit was over 18 and under 24 (19 to 23) AND
   1. Their earned income was less than one-half of their own support AND
   2. The taxpayer has at least one living parent AND
   3. The taxpayer does not file a joint return.

Phaseout

1. Phases out for Single taxpayers starting at income of $80,000 until $0 credit at $90,000.
2. Phases out for MFJ starting at income of $160,000 until $0 credit at $180,000.

^*There are some exceptions. See Pub 970.  New item to be added.  

TXLNX 8/13/2023