Several tax facts about the American Opportunity Tax Credit

The new American Opportunity Tax Credit provides many benefits. One of the benefits of the credit is that many taxpayers will be able to apply the cost of qualified educational expenses at a qualified educational institution for the next two years under the American Opportunity Tax Credit. In addition, the credit is a refundable credit which means that even if the taxpayer has no tax liability, they may qualify to receive cash back. Below are several important tax tips about the American Opportunity Tax Credit.
1. The full credit is limited to $2,500. This is broken down by first $2,000 paid is applied as credit. Then extends to 25% of the next $2,000 up to $500 for qualifying expenses.
2. The credit is a refundable credit up to $1,000 per student.
3. The credit is available for qualified expenses for higher education in 2009 and 2010. Qualified expenses is defined as expenses related to tuition and related fees, books and other required materials for course.
4. The credit is dependant on the taxpayers income. It phases out for higher income taxpayers.
5. The credit is available for any of the first 4 years of post-secondary education.



http://www.irs.gov/newsroom/article/0,,id=213584,00.html