American Opportunity Tax Credit

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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.

BREAKING DOWN '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.

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RELATED FAQS
  1. Can I use my IRA to pay for my college loans?

    If you are older than 59.5 and have been contributing to your IRA for more than five years, you may withdraw funds to pay ... Read Full Answer >>
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    If you are over 59.5, or separate from your plan-sponsoring employer after age 55, you are free to use your 401(k) to pay ... Read Full Answer >>
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    Free online calculators for determining your taxable income are located at Bankrate.com, TaxACT.com and Moneychimp.com. Determining ... Read Full Answer >>
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    Comprehensive income and gross income are similar, but comprehensive income is a specific term used on a company's financial ... Read Full Answer >>
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    The tax breaks accorded to qualifying widows or widowers include being able to use a tax filing status that allows for a ... Read Full Answer >>
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