American Opportunity Credit
The American Opportunity Tax Credit is a refundable tax credit for undergraduate college education expenses. This credit provides up to $2,500 in tax credits on the first $4,000 of qualifying educational expenses. The tax credit is scheduled to have a limited life span: it will be available only for the years 2009 through 2012, unless Congress decides to extend the credit to other years. The credit is worth up to $2,500 on the first $4,000 of qualifying educational expenses, which include course materials as well as tuition. The American Opportunity credit applies to all four years of undergraduate college education. The credit is gradually reduced (or “phased out”) for income from $80,000 to $90,000 (or $160,000 to $180,00 for joint filers). The tax credit is not available for people with incomes above the phase out range. Up to 40% of the credit is refundable, meaning that it can generate a refund larger than the amount of payments you made. New York State also has a $400 refundable credit for undergraduate tuition.