American Opportunity Credit

40% of the American Opportunity Credit may be refundable and the balance is nonrefundable. None of the Lifetime Learning credit is refundable.

The student must be enrolled at least half time for atleast one academic period beginning during the year. The tution statement, Form 1098-T will have a checkbox checked if the sudent met the half of time requirement.

Payments made in 2016 for academic periods beginning in 2016 or beginning in the first 3 months of 2017 qualify for the 2016 credit.

An academic period is any quarter, semester, trimester or any other period of study as resonable determined by an eligible educational institution.

If a student is claimed as a dependent on another person's tax return, all qualifying educational expenses of the student are treated as having been paid by that person.
if a student is not claimed as a dependent on another person's tax return, only the student can claim the credit.

A credit is available up to $2,500 per student for the first 4 years of higher education for tuition, course related books, activity fees and any equipment that must be purchased from the educational institution as a condition of enrollment. Room & Board expenses do not qualify.
The phase out for married taxpayers is Adjusted Gross Income between $160,000- $180,000.
The phase out is between $80,000 and $90,000 for single, head of household or qualifying widower(s) filing status taxpayers.
Married filing separately status are not allowed a American Opportunity credit.

Qualified educational expenses would include tuition and required fees, but would not include room and board, insurance, transportation or other personal living or family expenses, medical expenses, supplies or equipment.
The credits are subject to income limitations. The credits are not available for married filing separate returns. Both credits are claimed on IRS Form 8863.
The American Opportunity and Lifetime Learning credits are two federal credits available for qualifying higher education expenses paid to eligible educational institutions.
There may also be similar state credits or deductions available. Generally, the American Opportunity credit is available for the qualified expenses for the first 4 years of post-secondary education leading to a degree.
The Lifetime Learning credit is available for both degree and non-degree courses. This includes undergraduate courses not claimed as a American Opportunity credit, graduate studies, and students acquiring or improving their job skills.

You cannot claim the Lifetime Learning Credit and the American Opportunity credit in the same year. You may claim each of the credits for a different student in your family.

Any unused American Opportunity credit cannot be carried forward to future years.
The phase out for married taxpayers is Adjusted Gross Income between $160,000- $180,000.
The phase out is between $80,000 and $90,000 for single, head of household or qualifying widower(s) filing status taxpayers.
Married filing separately status are not allowed a American Opportunity credit.