Final answer:
The American Opportunity Credit (AOC) is available to eligible taxpayers who are pursuing higher education. It provides financial assistance for qualified education expenses during the first four years of post-secondary education.
Step-by-step explanation:
The American Opportunity Credit (AOC) is available to eligible taxpayers who are pursuing higher education. It was introduced as part of the American Recovery and Reinvestment Act of 2009. The credit provides financial assistance to taxpayers for qualified education expenses incurred during the first four years of post-secondary education.
To qualify for the AOC, the taxpayer or the taxpayer's dependent must be pursuing a degree or other recognized educational credential at an eligible educational institution. The credit can be claimed for tuition, fees, books, and other required course materials.
The AOC has income limits and varies in amounts depending on the taxpayer's modified adjusted gross income (MAGI).
The maximum credit amount is $2,500 per eligible student. It is important to note that the AOC is a non-refundable credit, which means it can reduce the taxpayer's tax liability but cannot result in a refund if the credit exceeds the tax owed.