(Image credit: Getty Images)Did you know there’s a tax break designed to recoup costs tied to your undergraduate degree?The American Opportunity Tax Act is a partially refundable credit that qualifying students can use to recover certain expenses within their first four years of post-secondary education. As a partially refundable credit, you may be eligible for a refund if your tax liability is $0.The student, someone claiming the student as a dependent, or a spouse making qualifying education payments can claim the AOTC on their tax return. While the credit won’t cover room and board expenses, it will help you with the cost of tuition and more.Subscribe to Kiplinger’s Personal FinanceBe a smarter, better informed investor.
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Sign up for Kiplinger’s Free E-NewslettersProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.Profit and prosper with the best of expert advice – straight to your e-mail.The AOTC is just one of many education tax breaks you can benefit from this upcoming tax season, so read on to learn what expenses you recover.What is the American Opportunity Tax Credit?With the American Opportunity Tax Credit (AOTC), you can claim qualified education expenses (such as tuition, certain required fees, and course materials) for the first 4 years of a post-secondary education at an accredited institution.Once the 4 years are up, you can no longer claim the AOTC even if you are still pursuing your undergraduate degree, certificate, or other related credential.As mentioned, the credit is partially refundable. That means that it can lower your tax liability to zero and you can get a portion of the remaining credit back as a tax refund.What is the credit amount for the 2024 AOTC?For 2024, the maximum annual credit amount is $2,500 per eligible studentA maximum of 40% is the refundable portion (of any remaining credit, up to $1,000)The total of all qualified tuition and related expenses when calculating the AOTC cannot exceed $4,000Additionally, the credit amount is equal to 100% of the first $2,000 of qualified education expenses per student claimed, plus 25% of the next $2,000 of qualified expenses you paid for that student.In other words: If you have $4,000 in qualifying expenses, the AOTC will cover 100% of the first $2,000 and 25% of the additional $2,000. That is equal to a maximum credit amount of $2,500.Who is eligible for the American Opportunity Tax Credit?To qualify for the AOTC, you’ll have to meet several standards regarding your enrollment status, the type of institution you are attending, and income.The credit can be claimed by an eligible student, your spouse (if filing jointly), or a dependent you claim on your tax return. That being said, let’s dive in.Student requirements:To be eligible for the AOTC, students must be enrolled in a post-secondary institution program conducive to a degree, certificate, or other recognized cre
