Without a doubt, college education is one of the most expensive investments you can ever make. Fortunately, the costs do not have to be that prohibitive because there are measures you can take to reduce your college education expenditure. If you are thinking about going back to school, you can advantage of the American Opportunity Tax Credit (AOTC) to enjoy affordable education. First, however, you need to learn how this tax credit works.
What is the American Opportunity Tax Credit (AOTC)?
The AOTC is a refundable tax credit for undergraduate education. You can use this tax credit to decrease your federal tax bill by up to $2, 500 annually for each qualified learner. The credit is only available for the first four years of college education, meaning those who have finished four-year undergraduate degrees cannot claim it for their graduate studies. The tax credit was initially set to expire in 2012 but the recent fiscal tax deal extended it to 2017.
As stated above, this tax credit is available for the first four years of college education. If you are studying in any post-secondary educational institutions, you are eligible as long as you are enrolled at least part time. Students of all accredited institutions, including online colleges, are eligible. The maximum credit is $2,500 per year for four years. Since you can claim it for multiple qualifying students (your dependents) you can save a lot of money this way.
You lose your eligibility for AOTC if you are single and you have an adjusted gross income (AGI) worth $80,000-$90,000 or you are married and your joint AGI falls between $160,000 and $180,000. If you did not join college after high school, here is your chance to enroll for college at an affordable price. The fact that accredited online institutions qualify means you can achieve your educational ambitions from your home, which will reduce the costs for you even further.
In short, you qualify if you:
- Are studying in an accredited post secondary institution
- Are in your first four years of college
- Are single with an AGI of $80,000-$90,000
- Are married with an AGI of $160,000 and $180,000
Which Expenses are Covered?
The American Opportunity Tax Credit only applies to qualified expenses, which are defined as the expenses that you must meet to enroll or attend your college. These include:
- Course equipment
Going by this argument, course materials are covered (since you need them to attend your course) but sports fees (for those who are taking non-sport related courses) are not covered. Other things that are not covered include:
- Room and board
There are things that reduce your qualified expenses and they include:
- Educational assistance from employers
- Educational assistance for veterans
- Other tax-free benefits
Examples of things that do not decrease your qualified expenses include:
Want to learn more about ways you can fund your education at Argosy University? Contact us to learn more today at 1-866-4ARGOSY!