The American Opportunity Tax Credit (AOTC) aims to support eligible students throughout their first four years of higher education in the US.
American Opportunity Tax Credit (AOTC)
In America, students can qualify for the American Opportunity Tax Credit (AOTC) it is an initiative for eligible students to pay their first four years of higher education and the maximum annual amount is $2,500.
Eligible students are entitled to a 40 percent return of any remaining credit funds (up to 1,000 dollars) if the credit reduces the amount of tax they owe to zero. Each student will receive a credit equal to 100 percent of the first 2,000 dollars in qualified education costs paid on their behalf, plus a further 25 percent of the subsequent 2,000 dollars in such costs.
Student Below 24 Can Still Be Eligible For The AOTC?
The answer is no. If you were under the age of 24 at the end of 2020, you cannot claim any portion of the American Opportunity Credit as a refundable credit on your tax return. Instead, you can only use the non-refundable part of your allowable credit to lower your tax.
Furthermore, you wouldn’t qualify if you didn’t file a combined return for 2020 and at least one of your parents was still living at the end of the year. If you are unable to meet these requirements, you would still be eligible to claim a part of your allowable American Opportunity Credit as a refundable credit. However, you won’t be eligible to receive any of the parts of your permitted American Opportunity Credit as a refundable credit if all the conditions listed below are true:
- You were below the age of 24 at the end of 2020
- You were at least 18 years old by the end of 2020
- You were a full-time student for 2020
- Your earnings were less than half your support
- Either of your parents was alive at the end of 2020
- You weren’t filing a joint return for 2020