What Is the American Opportunity Tax Credit?

The American Opportunity Tax Credit (AOTC) is a tax credit that assists qualified students (or their families) in funding college. It can lower your tax bill by as much as $2,500 annually, per student, for four years of post-secondary education.

While some credits merely lower the amount you owe, up to 40% of the AOTC may be refundable — so you can receive as much as $1,000, even if you don’t owe tax.

Who Can Take the American Opportunity Tax Credit?

To qualify for the AOTC, you must meet the following:

• Student is working toward a degree or accredited credential
• Enrolled at least half-time for at least one term during the year
• No felony drug conviction on the last day of the tax year
• You (or your dependent) haven’t claimed the AOTC for more than four tax years

What Expenses Are Covered?

The AOTC pays for qualified education Wexpenses, such as:

• Tuition and fees
• Course materials (books, supplies, equipment)

⚠️ Housing, transportation, and medical costs don’t qualify.

Income Limits

To receive the maximum credit:

• Modified Adjusted Gross Income (MAGI) must be $80,000 or less ($160,000 or less for joint filers)

The credit phases out above those limits and disappears entirely at:

• $90,000 for individuals
• $180,000 for married couples filing jointly

How to Claim It

You claim the AOTC by filing Form 8863 with your tax return. You’ll need Form 1098-T from your school to report your tuition payments. It’s also important to keep receipts for books and supplies.

If you’re overseas, it can be complicated to file taxes — particularly when balancing education credits, foreign income exclusions, and deadlines that aren’t even aligned with U.S. calendars. Expat tax online services simplify the process and make sure you’re not forgoing money on the bottom line.

FAQs: American Opportunity Tax Credit

May I receive the AOTC if I am an international student?
 Only U.S. citizens, resident aliens, and certain eligible non-citizens are eligible. You’ll also need to have a current Social Security number or taxpayer ID.

Can I claim the AOTC for graduate school?
 No — the credit only applies to the first four years of postsecondary education.

Can I claim the credit for my child?
 Yes, if your child is a dependent and otherwise meets the qualifications, you can claim the credit on your return.

What if I pay tuition with student loans?
 You can still get the AOTC, as long as the costs were paid in the tax year. Loans are considered payment when they’re disbursed.

What if I attend a foreign school?
 You can still qualify, provided the foreign school is eligible — that is, it’s on the U.S. Department of Education’s approved school list.

Can I claim the AOTC and the Lifetime Learning Credit in the same year?
 No, not for the same student. But if you have more than one student in your household, you may be able to claim both — one on each student.

Need help with your taxes while living abroad?

Professionals like Expat Tax Online can guide you through foreign income rules, and keep you compliant with U.S. tax laws — no matter where you study or work.