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The American Opportunity Tax Credit can be claimed for tuition and certain fees you pay for higher education in 2020.

The American Opportunity Tax Credit can be claimed for expenses for the first four years of post-secondary education. It is a tax credit of up to $2,500 of the cost of qualified tuition and related expenses paid during the taxable year. Of the total credit amount, 40% is refundable.

The terms "qualified tuition" and "related expenses" have been expanded to include expenditures for course materials. For this purpose, the term "course materials" means books, supplies and equipment needed for a course of study whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance.

The full credit is available to individuals whose modified adjusted gross income is $90,000 or less, or $180,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels.

The credit is claimed using Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits).

To enter this information in the TaxAct program:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Education in the Federal Quick Q&A Topics menu to expand, click All education topics, then click Yes.
  3. Click + Add Student Information to create a new copy of the form or click Edit to review a form already created.
  4. Continue with the interview process to enter all of the appropriate information.
  5. On the screen titled Student Information, select from the Student drop-down, then click Continue.

TaxAct will generally determine which education benefit is most advantageous for your Federal return based on the data entered on your return - such as income, filing status, amount of qualified expenses, etc.

You can review or modify the tax treatment of the education expenses, to see how the refund or amount owed may change when you change the selection between the American Opportunity Credit and the Lifetime Learning Credit.

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Education in the Federal Quick Q&A Topics menu to expand, then click Education credit summary.
  3. Continue with the interview process to enter all of the appropriate information.
  4. On the screen titled Higher Education - Summary, click the Click here link at the bottom of the list to change the selected education benefit, then click Continue.

You can obtain additional information on this credit and how this affects college expenses reported on the tax return at the IRS American Opportunity Credit: Questions & Answers website.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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