Each year, the federal government creates new tax credits that benefit tax payers. The American opportunity tax credit was created under the American Recovery and Reinvestment Act of 2009. The act, aimed at creating new jobs and giving tax breaks to the American people, was an effort to get the struggling economy back on track. So far the ARRA has reportedly created over a half million jobs since October 1st of last year.
One part of the ARRA was the American Opportunity Act. With the American opportunity act more Americans are given the opportunity to go back to school to receive a college degree. The act creates this opportunity by giving a tax credit to individuals who went back to school for more than half time last year. This credit is also available to individuals who have a dependant or spouse that went back to school during the year.
This credit was an extension of the existing hope credit and is available to taxpayers with certain levels of income. You are able to receive a full credit if you are single and your adjusted gross income is less than $80,000 or you are married filing jointly and your total adjusted gross income is under $160,000. The tax credit allows up to $2,500 for each qualified student. If your income exceeds the limit, the credit will phase out.
Taking advantage of the American Opportunity Credit is a great way to save on your taxes and increase the amount of money that you receive on your tax return. If you are looking for more information on the topic then check out the IRS website and search for the American Opportunity Credit.
Author: Greg Jackson