Higher EducationAmerican Opportunity Tax Credit
Course Materials Qualify for Tax Credit
ATTENTION STUDENTS AND PARENTS!
SAVE YOUR COURSE MATERIAL RECEIPTSYOU MAY BE ELIGIBLE FOR A TAX CREDIT UP TO $2,500!!
The American Opportunity Tax Credit (AOTC) is a partially refundable tax credit of up to $2,500 each year for out-of-pocket higher education expenses including course materials, tuition, and fees for the first four years of college. First enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA), the credit was made permanent by the Consolidated Appropriations Act, 2016 (P.L. 114-113). The credit is applied for by using IRS form 8863.
You must keep a record of your expenses to be eligible!!
At a Glance
Tax Credit
- Tax credit up to $2,500 of out-of-pocket cost of tuition and related expenses including course materials paid during the taxable year.
- Eligible for the first four years of college.
- 100% of the first $2,000 and 25% of the next $2,000.
- 40% of the credit is refundable with the maximum refundable amount of $1,000.
- Phase-out for taxpayers with adjusted gross income in excess of $80,000 or $160,000 for married couples filing jointly (AGI phase out limits are $90,000 individual, $180,000 married couples filing jointly).
- $9.3 billion in total benefits for students and families expected in 2022.
- 9 million students and families are expected to claim the AOTC in 2022.
NOTE: Students who do not qualify for the AOTC or have used all their eligibility for the first four years of college, may still be eligible for the Lifetime Learning Tax Credit. With some colleges and universities including course materials in tuition and fees, these costs may be eligible expenses for the Lifetime Learning Credit. See IRS Publication 970 for details.
News & Resources
In the News
(U.S. News, Feb. 13, 2023)
(Forbes, Nov. 23, 2022)
NACS Press Release
(NACS, Aug. 23, 2021)
(NACS, Aug. 23, 2021)
(Forbes, Dec. 20, 2015)
(Forbes, July 31, 2015)
(The Motley Fool, February 7, 2015)
(Inside Higher Ed, January, 19, 2015)
AACC and ACCT Endorse H.R. 3393, the Student and Family Tax Simplification Act
(Association of Community College Trustees, July 21, 2014)
Harnessing the Tax Code to Promote College Affordability
(Center for American Progress, May 28, 2014)
Resources
Download one of the Tax Credit Banner Ads
to your website and Facebook page
Tax Credit Facebook Page
Congressional Research Service Overview of AOTC (June 2018)
IRS: Publication 970, Education Tax Benefits
IRS: Tax Benefits for Education: Information Center
IRS: American Opportunity Tax Credit
IRS: Lifetime Learning Credit
Tax Credit Facebook Page
Congressional Research Service Overview of AOTC (June 2018)
IRS: Publication 970, Education Tax Benefits
IRS: Tax Benefits for Education: Information Center
IRS: American Opportunity Tax Credit
IRS: Lifetime Learning Credit
Frequently Asked Questions
What is the American Opportunity Tax Credit?
The American Opportunity Tax Credit (AOTC) is a partially refundable tax credit of up to $2,500 each year for out-of-pocket higher education expenses including course materials, tuition, and fees for the first four years of college. First enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA), the credit was made permanent by the Consolidated Appropriations Act, 2016 (P.L. 114-113).The Credit is applied for by using form 8863. The instructions may be found here.
The Internal Revenue Service Publication 970 provides detailed information, useful examples and guidance on all of the educational benefits of the tax code, including the American Opportunity Tax Credit. If you have more specific questions, we strongly encourage you to consult the financial aid office of your institution, a qualified tax advisor or legal professional, or the IRS about your unique situation.
What course materials are eligible for the tax credit?
Under the AOTC "required" course materials are eligible for the tax credit as well as tuition and fees that have not been paid for by grant or scholarship aid. In other words, you may not receive a double benefit for your qualified expenses. Qualified ”course materials include books, supplies and equipment needed for a course of study whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance. As a practical matter, it would be fair to assume that any purchased course materials identified as required and listed on a course book list for your registered classes would qualify for the tax credit.
What necessary documentation will we need for the tax credit?
According to the IRS, taxpayers should retain adequate documentation to prove education-related expenses, such as transcripts or course descriptions that show periods of enrollment, list of course materials for your classes, cancelled checks, and receipts that verify the amounts spent on tuition, books, supplies, and equipment used in a course of study. IRSTopic 305
(Recordkeeping for Individuals) addresses this issue.
Additionally, with the permanent extension of the AOTC in the Consolidated Appropriations Act, 2016, taxpayers must have a taxpayer identification number (TIN)
that was issued on or before the due date for filing the return of tax for the taxable year. The taxpayer must also include the employer identification number (EIN)
of any institution to which qualified tuition and related expenses were paid with respect to the individual.
It is important to note that beginning in the 2016 tax year, colleges and universities are required to report payments for qualified tuition and related expenses in Box 1 of IRS Form 1098-T. Institutions will no longer be able to report amounts of qualified tuition and related expenses in Box 2. In most cases, this will not include what is spent on qualified course materials.
Still have questions or need additional information?
Please visit the Internal Revenue Service's: Questions and Answers
page.
About Us
Headquartered in Oberlin, Ohio, the National Association of College Stores (NACS) is the professional trade association representing the college store industry. NACS represents campus retailers and industry-related companies that supply course materials and other merchandise and services to campus stores. NACS provides education and other resources that help its member stores support student success, the campus experience, and the missions of higher education institutions. The role of all college bookstores is to support the educational function of the institution of higher education, and the faculty and the students that they serve by listening and responding to their needs and interests while providing the highest level of service.
NACS created textbookaid.org in consultation with student organizations, when we saw the need to help students and parents find reliable information to help them with college course material costs. The purpose of textbookaid.org is to be a source of information, to increase awareness of sources of funding, new laws and regulations and other issues that affect students' ability to pay for college.
NACS supports efforts to enhance affordable and equitable access to quality course materials, and our association and members will continue to work as a student ally.
Contact
Contact Us
The National Association of College Stores is providing the information on this web site for general guidance only. The information on this site does not constitute legal advice, tax advice, accounting advice, or professional advice of any kind. There is no substitute for consultation with professional advisors based on the facts of each individual situation. NACS disclaims any liability whatsoever in connection with the accuracy or completeness of the material on this web site, or reliance on the general guidance provided.