Registered Tax Return Preparer RTRP Practice Exam

Question: 1 / 400

What income level must taxpayers ensure they do not exceed to qualify for the American Opportunity Tax Credit?

Over $40,000 for single filers

Over $80,000 for joint filers

There is no income limit

Specific income limits apply based on filing status

The American Opportunity Tax Credit (AOTC) has specific income limits that vary based on the taxpayer's filing status. To qualify for the full credit, single filers must have a modified adjusted gross income (MAGI) of less than $80,000, while joint filers must have a MAGI of less than $160,000. A phase-out begins at these thresholds, meaning that taxpayers earning more than these amounts will have a reduced credit amount or may not be eligible for the credit at all.

This approach ensures that the benefits of the AOTC are targeted toward individuals and families with lower to moderate incomes and encourages access to higher education while promoting equitable tax equity in educational assistance. Therefore, understanding that specific income limits apply based on the taxpayer's filing status is essential to determining eligibility for the AOTC.

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