iStock_000005004561XSmallAt the beginning of 2009, Congress and the president approved the Stimulus bill which designated $30 billion toward affordability initiatives. This means that the government designated more money in order to help Americans finance college and earn a college degree.� The credit is aimed at helping middle income Americans afford education but in order to claim the credit individuals must meet the following criteria:

  • Individuals that want to apply for the tax credit must be an eligible citizen or legal resident of the United States
  • The program is available to eligible students through 2010
  • Students must be enrolled in an accredited and approved university or college which includes those that are eligible to participate in Title IV Federal Student Aid
  • Students must be enrolled in a program leading to an undergraduate degree or other approved education credential
  • Students must be enrolled full time in order to receive the $2,500 but it phases out for part-time students
  • However, if students or their families do not earn enough to pay income taxes then they can receive a $1,000 refund
  • Students who use other federal aid may not be eligible for the Tax Credit
  • Students are allowed to apply for all four years of undergraduate education
  • Single tax filers must earn less than $80,000 on their modified adjusted gross income needs to be eligible to claim the credit. Joint tax filers must have a modified adjusted gross income less than $160,000 per year. If incomes are above the preceding amounts then students may be eligible for partial tuition tax credits but they phase out with income level
  • The costs of tuition also include qualifying expenses like required course materials
  • 40% of the credit is refundable
  • If parents want to claim the credit it must be for their dependent child’s college expenses and listed as that way the other person’s tax form
  • File your tax form and see a qualified tax accountant


The American Opportunity Tax Credit is the way to claim your stimulus cash. The maximum tuition tax credit is $2,500 which is 100 percent reimbursement for the first $2,000 spent on higher education and 25 percent of the next $2,000 spent on educational expenses. So this tax credit makes college more affordable by reducing the amount of money individuals pay in taxes.

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