American Opportunity Tax Credit
The name of this tax credit tells you nothing about it -- but at least it sounds super optimistic in the process. Specifically, the American Opportunity Tax Credit is for people who are paying for college -- up to four years of undergraduate study. The credit is scheduled to remain in effect through the 2017 tax year, and it allows you to claim a credit for eligible college expenses including tuition, fees and course materials up to $2,500.
Up to 40 percent of your cost is refundable -- even if you don't owe any taxes. And, it includes any education fees for the tax year, as well as those for the first three months of the next year if they are paid in the current year. So, if you've got education expenses coming due in January, February or March of next year, get out your checkbook before Dec. 31. It may help you save money on your taxes [source: Bell].