J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

33.8 American Opportunity Credit

For 2012, you may claim an American Opportunity credit on Form 8863 for up to $2,500 of qualified tuition and fees paid for each eligible student in the first four years of college or other post-secondary institution. Note that the American Opportunity will expire at the end of 2012 unless Congress enacts legislation that extends the credit.

An eligible student must meet the following requirements: (1) be enrolled in one of the first four years of postsecondary education, (2) be enrolled in a program that leads to a degree, certificate, or other recognized educational credential, (3) be taking at least one-half of the normal full-time workload for his or her course of study for at least one academic period beginning during the calendar year, and (4) not have any felony conviction for possessing or distributing a controlled substance.

For each eligible student, the American Opportunity credit is 100% of the first $2,000 and 25% of the next $2,000 (for a maximum of $2,500) of tuition, student-activity fees that are required as a condition of enrollment or attendance, and books, supplies, and equipment needed for courses. The books, supplies, and equipment qualify for the credit whether or not they had to be purchased from the educational institution.

Phaseout of credit depends on MAGI.

The tentative credit (100% of the first $2,000 and 25% of the next $2,000 of qualified expenses) is phased out over a modified adjusted gross income (MAGI) range of ...