American Opportunity Credit

For 2009 and 2010 the existing Hope education credit has been modified and is now referred to as The American Opportunity Credit.  This credit is designed to help students and their parents pay for the first 4 years of college.  The modification to the Hope credit makes it aviailbe to a larger range of taxpayers and is now available to people with higher incomes and people who owe no tax. 

With this new modification the maximum amount of the Hope credit available increases to $2,500 per student.  The credit does not start to phase out until your AGI is between $80,000 and $90,000 ($160,000 and $180,000 for Married Filing Joint).  The Hope credit can also now be claimed for the first four years of college instead of the first two years as it had been previously.  Also, 40% of the Hope credit is now a refundable credit.  This means you can receive up to $1000 even if you owe no tax.  The term “qualified tuition and related expenses” has also been expanded and now includes costs for “course materials”.  This means you can now include the cost of books, supplies, and equipment needed for classes. 


About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has owned his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.