American Opportunity Tax Credit

AAA

DEFINITION of 'American Opportunity Tax Credit'

A tax credit that enabled more student and parents to pay for part of their college expenses in the 2009 and 2010 tax years by expanding the existing Hope tax credit. The maximum annual tax credit per student is $2,500 of the cost of qualified tuition and related expenses paid during the tax year.

INVESTOPEDIA EXPLAINS 'American Opportunity Tax Credit'

Major changes from the Hope credit include a $700 increase in the tax credit and allowing the credit to be used for the first four years of post-secondary education instead of only the first two years.

RELATED TERMS
  1. Hope Credit

    A nonrefundable education tax credit that can be claimed for ...
  2. Education Credit

    A type of tax credit available to students of a post-secondary ...
  3. Education Loan

    Money borrowed to finance education or school related expenses. ...
  4. Coverdell Education Savings Account ...

    A tax-deferred trust account created by the U.S. government to ...
  5. Qualified Higher Education Expense

    Expenses such as tuition and tuition related expenses that an ...
  6. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
Related Articles
  1. Economics

    Invest In Yourself With A College Education

    Spending a few thousand dollars on school could help you earn millions more.
  2. Insurance

    Investing In Your Child's Education

    Overwhelmed by increasing tuition costs for your kids? The U.S. government can help.
  3. Savings

    Choosing The Right 529 Education Savings Plan

    Before you fund one of these education-savings vehicles, be sure you know their differences.
  4. Savings

    5 Ways To Fund A College Education

    You can go to college without going broke, but it may take an unconventional approach.
  5. Taxes

    Tax Deductions Vs. Tax Credits

    Understanding the difference between tax deductions and credits is crucial, as the tax strategies that you adopt now can favor one over the other and yield substantially different tax savings.
  6. Taxes

    Student Tax Breaks

    Education bills may not be as stressful as you think - these student tax breaks can help!
  7. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  8. Budgeting

    Pay For A College Education With Retirement Funds

    These savings vehicles may be better than college saving funds for some families.
  9. Taxes

    Education Savings Account Tutorial

    This comprehensive guide goes through what an Education Savings Plan is and how to set one up, contribute to it and withdraw from it.
  10. Taxes

    Which Is Better? Tax Preparer Or Tax Software

    Every taxpayer – and every year – is different, so here are four factors to help you decide whether a tax pro or software is best for you.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center