The Future of the American Opportunity Tax Credit

[GAMomto4]

<p>Like many people on this CC our family is doing ok, but we have to be really careful with spending and having to carefully watch/plan future college expenses. With one already in college and 3 in high school, I love the American Opportunity tax Credit (It's a $2000 swing per college student per year for our family's tax bracket). </p>

<p>From my research it appears that it will still be around for tax year 2012. I know noone knows for sure what Congress will do (another subject :)!), but does anyone know the likelihood that it will be extended (and if so in it's current form or at lower $$ values) in years beyond 2012. The existence of this credit may influence my high school kids selection of colleges.</p>

<p>Thanks!</p>

[collegeparents]

<p>I’d say it is “iffy” for 2013…but we can always hope for the best!</p>

[rockvillemom]

<p>Thank you for mentioning this -I did not realize it had been extended for 2012 - so I am happy!</p>

<p>

Update November 9, 2011 — This page has been updated to reflect the fact that the American Opportunity Tax Credit, which was to expire at the end of 2010 was extended for an additional two years through December 2012 by the Tax Relief and Job Creation Act of 2010.</p>

<p>Under the American Recovery and Reinvestment Act (ARRA), more parents and students will qualify for a tax credit, the American Opportunity Tax Credit, to pay for college expenses.</p>

<p>The American Opportunity Tax Credit modifies the existing Hope Credit for tax years 2009 and 2010 under ARRA. The credit was extended to apply for tax years 2011 and 2012 by the Tax Relief and Job Creation Act of 2010. The new credit makes the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.</p>

<p>The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.

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