The American Opportunity Tax Credit is one that you shouldn’t miss out on while it’s still around. It was extended to run through 2012 but might not be around after that. You can claim the credit if you’re still in your first four years of college.
Each qualifying student can get up to a $2,500 tax credit and up to $1,000 is refundable meaning if you owe zero dollars in taxes when all is said and done then you’ll actually receive some money from the credit. The eligible student can be you, your spouse, or a qualifying dependent. You cannot file for the American opportunity tax credit if your status is married filing separately.
Your modified adjusted gross income must be less than $90,000 ($180,000 married filing jointly). The credit can only be claimed for legitimate college expenses like tuition and things like books that are required for study. Study must take place at a college, university, vocational or post-secondary educational institution.