The American Opportunity Credit

The American Opportunity Tax Credit is a refundable tax credit designed to offset undergraduate college education expenses. This credit provides up to $2,500 in tax credits on the first $4,000 of qualifying educational expenses. Forty percent of the credit (up to $1,000 maximum) is refundable. The tax credit is scheduled to be available only for the years 2009 and 2010, unless Congress decides to extend the credit to other years. To properly reflect the impact of college funding needs not only to incorporate investment assets such as 529 plans, model the out-going expenses for tuition, but also allow for educational tax credits through either a tax adjustment or the ability to create a cash inflow for the credit at any point in the planning horizon like ExecPlan Express financial planning software does.