Oregon Tax Consultants Practice Exam

What is the total educational benefit available under the American Opportunity Credit for four consecutive years?

1. $5000

2. $10000

3. $12500

4. $20000

The correct answer is: $10000

The American Opportunity Credit provides a significant educational tax benefit to eligible students in higher education. This credit is available for up to four tax years and allows for a maximum annual credit of $2,500 per eligible student. To determine the total educational benefit available over four consecutive years, we can multiply the annual maximum credit by the number of years. Specifically: $2,500 per year × 4 years = $10,000. Thus, a total of $10,000 can be claimed under the American Opportunity Credit over four consecutive years, making this the correct and substantiated answer. This structure of the credit is key in helping families offset the costs of post-secondary education by providing financial relief during a critical time in a student’s academic career.