Probably the most well-known college tax credit or education tax credit is the American Opportunity Credit. While it's not a tuition tax credit, it does apply only to students who are currently enrolled in their first four years of college education. There's good news for those of you who are studying part time while you work, too. Part-time enrollment counts, as long as it’s at least half-time and leads to a degree or certificate.
You can claim this tax credit as long as your enrollment in classes lasts for at least one term at the beginning of the tax year. The flip side, though, is that if you’ve got a degree already and are studying for a certificate or a graduate degree, you’re not eligible.
The credit is good for up to $2,500, and the income phase out starts at a MAGI (modified adjusted gross income) of $80,000. That credit is meant to cover education expenses that can include tuition, as well as any other course fees and materials. Tax credit can be received for 100% of the first $2,000, plus 25% of the next $2,000 that has been paid during the taxable year.
Remember, your MAGI is based on yearly earnings, which you can use FlyFin’s calculation tools to find, in addition figuring out how to make accurate quarterly tax payments and the
federal income tax that you'll owe.