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Overview of the American Opportunity Credit for 2021 Table 2-1. Maximum credit Up to $2,500 credit per eligible student Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2021 (generally, the freshman through senior years, determined by the eligible educational institution, not including academic credit awarded solely because of the student's performance on proficiency examinations) Number of tax years credit available Available ONLY for 4 tax years per eligible student Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half-time for at least one academic period that begins during 2021 (or the first 3 months of 2022 if the qualified expenses were paid in 2021) Felony drug conviction As of the end of 2021, the student had not been convicted of a felony for possessing or distributing a controlled substance Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Payments for academic periods Payments made in 2021 for academic periods beginning in 2021 or beginning in the first 3 months of 2022 TIN needed by filing due date Filers and students must have been issued a TIN by the due date of their 2021 return (including extensions) Educational institution’s EIN You must provide the educational institution's employer identification number (EIN) on your Form 8863 Can You Claim the Credit? The following rules will help you determine if you are eligi- ble to claim the American opportunity credit on your tax return. Who Can Claim the Credit? Generally, you can claim the American opportunity credit if all three of the following requirements are met. • You pay qualified education expenses of higher edu- cation. • You pay the education expenses for an eligible stu- dent. • The eligible student is either yourself, your spouse, or a dependent you claim on your tax return. Note. Qualified education expenses paid by a depend- ent you claim on your tax return, or by a third party for that dependent, are considered paid by you. Student qualifications. Generally, you can claim the American opportunity credit for a student only if all of the following four requirements are met. 1. As of the beginning of 2021, the student had not com- pleted the first 4 years of postsecondary education (generally, the freshman through senior years of col- lege), as determined by the eligible educational insti- tution. For this purpose, don't include academic credit awarded solely because of the student's performance on proficiency examinations. 2. The American opportunity credit has not been claimed by you or anyone else (see below) for this student for any 4 tax years before 2021. If the Ameri- can opportunity credit has been claimed for this stu- dent for any 3 or fewer tax years before 2021, this re- quirement is met. 3. For at least one academic period beginning (or trea- ted as beginning) in 2021, the student both: a. Was enrolled in a program that leads to a degree, certificate, or other recognized educational cre- dential; and b. Carried at least one-half the normal full-time work- load for his or her course of study. The standard for what is half of the normal full-time workload is determined by each eligible educational institution. However, the standard may not be lower than any of those established by the U.S. Department of Education under the Higher Education Act of 1965. Chapter 2 American Opportunity Credit Page 11