The American Opportunity Tax Credit is a maximum of $2500., of which 40% of the credit may be refundable, with a maximum refund of $1000. The other portion is applied to the tax liability, up to the amount of the tax if there is taxable income.
Qualifying expenses include Tuition and required enrollment fees, course-related books, supplies and equipment. This applies for the first four years of undergraduate. Can be claimed for only 4 years. Must be enrolled at least half-time program, and no felony or drug convictions. There is a modified AGI phaseout.