Higher education can be expensive, whether you’re paying for it yourself as an army member or relying on financial aid. Fortunately, several tax credits and deductions are available to help offset these expenses. The American Opportunity Credit is one such option. It provides a credit of up to $2,500 for tuition, fees, and course materials paid each year, and it’s partially refundable.
The American Opportunity Tax Credit (AOTC) was introduced by former President Obama as part of the American Recovery and Reinvestment Act 2009. This tax credit is designed to help families pay for education expenses. The credit is worth up to $2,500 per eligible student and is partially refundable.
Eligible educational expenses include tuition, required enrollment fees, course materials, and equipment. However, students and their parents must keep good records of these expenses to claim credit. The best way to do this is to keep track of Form 1098-T, which is received from your university before Jan. 31 each year.
This credit is available only for the first four years of post-secondary education. It can be claimed by a parent, spouse, or independent student who is enrolled in college. In addition, the credit can be used to offset income tax. Unlike a deduction, the credit can be used to offset both federal and state taxes.
AOTC for Army Members
Whether you’re an active duty service member, a veteran, or you are a family member of a military personnel, you may qualify for tax credits and deductions. These benefits help you save money on tuition and other education expenses for yourself or your family members.
The American Opportunity Tax Credit (AOTC) is a credit of up to $2,500 per student for qualified higher education expenses. This credit is designed to help with tuition and fees for the first four years of college.
Unlike other tax breaks, the AOTC does not apply to amounts paid with funds from a 529 plan or Coverdell education savings accounts. It also does not affect state financial aid you receive.
Military AOTC Amount
Many service members’ career success depends on getting a good education. But that’s often a costly pursuit. The American Opportunity Tax Credit – up to $2,500 per year for tuition and fees – helps make it more affordable.
This partially refundable credit can significantly reduce the amount of taxes you owe and, in some cases, can even provide you with a refund. However, to claim the credit, you’ll need to have documentation of your expenses. That means saving your receipts and checking your Form 1098-T to see your eligibility.
In addition to your tuition and fees, qualified expenses include books, supplies, equipment, and required fees. But don’t confuse this with your 529 plans or Coverdell education savings accounts, which are not considered eligible school expenses for the AOTC. However, books do count as qualifying expenses for the AOTC for service academy cadets and midshipmen. This is a great way to offset the cost of your education and help you on your path to a rewarding career.