University of California, Riverside

Student Business Services

American Opportunity Tax Credit

The American Opportunity Tax Credit is a new federal tax program that provides up to $2500 a year to help offset the cost of your fees and books while you're in your first four years of college. Talk with a tax professional or visit the IRS webs site for details.

How Do I Qualify?

If you or your parents earn less than $180,000 a year ($90,000 for single filers) and you're enrolled as an undergraduate at UC at least half time, you may qualify. If your parents claim you as a dependent on their tax return, your parents get the credit. You may be able to claim the Lifetime Learning Tax Credit if you don't qualify for the American Opportunity Tax Credit.

How Much Will I Get?

The maximum credit is $2,500. If your tax liability is less than that, you'll get a credit up to what you owe or $1,000, whichever is more. The dollar value of the credit is gradually reduced for taxpayers whose incomes are $80,000-$90,000 (single filers) and $160,000-$180,000 (couples filing jointly).

What Educational Expenses Qualify?

Qualified expenses include tuition, fees, course materials and textbooks. Not included are room and board, student activity fees, health insurance premiums, equipment, transportation or other personal living expenses. You must subtract from your qualifying expenses all non-taxable grants and scholarships you received during the year.

How Do I Get the Credit?

You (or your parents) claim the credit on your federal income tax return. In February 2010, you should have received your copy of the IRS "Tuition Statement" form, or 1098-T; it will show your UC fees and your grants and scholarships. You may find it useful in calculating your eligibility for the tax credit. If you're a dependent student, be sure to give the 1098-T to your parents so they can get the credit, and save all receipts for qualified expenses for your records.

Can I Get the Credit If I Use Loans to Pay for School?

Yes. Qualified expenses paid with student or parent loans are eligible for this tax credit.

Can I Claim the Credit If I Have a 529 Plan?

If you plan on claiming the credit, the tax-free portion of 529 college savings plans, 529 "prepaid" tuition plans and Coverdell Educational Savings Accounts can't be used to pay for qualifying expenses. In other words, you can use those funds for room and board, but not fees and books.

Any Other Limitations?

You can't use any of the following sources of cash to pay for the portion of the qualified expenses used as the basis for claiming the credit: taxfree scholarships or grants, Pell Grants, employer-provided educational assistance, veterans' educational assistance and other tax-free payments received as educational assistance.

My Parents Have Two Children in College. Can They Claim the Credit for Each of Them?

Yes, provided both students are undergraduates enrolled at an eligible institution at least half time in the first four years of a program leading to a degree or certificate.

For More Information:

* seach for American Opportunity Credit and/or IRS Publication 970

More Information 

General Campus Information

University of California, Riverside
900 University Ave.
Riverside, CA 92521
Tel: (951) 827-1012

Contact Information

Student Business Services
900 University Avenue

Tel: (951) 827-3204
Fax: (951) 827-3576

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