How to Take the American Opportunity Credit as a Graduate Student

by Tiffany Raiford ; Updated July 27, 2017
Claiming education credits lowers your tax liability.

The American Opportunity Credit is an income tax credit issued to college students by the Internal Revenue Service. Any college student enrolled in an accredited university in the United States is eligible to claim the American Opportunity Credit, which provides up to $2,500 in tax credits as long as the student’s adjusted gross income is less than $90,000; or $180,000 for married taxpayers. Graduate students are eligible to take the American Opportunity Credit twice; during the first two years of graduate school.

Step 1

Calculate your adjusted gross income; if it exceeds the maximum allowed amount for the American Opportunity Credit you are ineligible to claim the credit on your income tax return.

Step 2

Obtain form 8863 and fill out part one of the form. Enter your name, your Social Security Number and your qualified tuition and expenses for school for the tax year in columns A through C.

Step 3

Take $2,000 from the amount in column C and write the difference in column D. Multiply the number in column D by 25 percent and write the amount in column E.

Step 4

Enter the amount from column C in column F, if the amount in column D is zero. If not, you will add $2,000 to the amount in column E and write the total in column F. Skip part two and move onto part three.

Step 5

Place the amount from line two on line seven. Enter $90,000 on line eight if you file your return single, widower or head of household or $180,000 if you file married. Online nine you need to enter the amount from line 38 of form 1040 or line 22 of form 1040A and subtract the amount online nine from line eight and enter the total on line 10. If the total is zero you cannot take the American Opportunity Credit and need not fill out the rest of form 8863.

Step 6

Enter $20,000 on line 11 if you file your return as a married person; $10,000 if you file any other way. Determine if the amount on line 10 is equal to or more than the amount on line 11; if it is, you need to enter 1.000 on line 12. If not, then you must divide line 10 by line 11 and enter the amount rounded to the nearest decimal on line 12.

Step 7

Multiply the amounts on lines seven and 12 and enter the amount on line 13. Multiply the amount on line 13 by 40 percent and enter the total on line 14. Enter the amount on line 14 on line 66 of form 1040 or line 43 of form 1040A.

About the Author

Tiffany Raiford has several years of experience writing freelance. Her writing focuses primarily on articles relating to parenting, pregnancy and travel. Raiford is a graduate of Saint Petersburg College in Florida.

Photo Credits

  • Comstock/Comstock/Getty Images
Cite this Article A tool to create a citation to reference this article Cite this Article