{ "id": "R42561", "type": "CRS Report", "typeId": "REPORTS", "number": "R42561", "active": true, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 584948, "date": "2018-06-04", "retrieved": "2018-09-12T22:51:19.686987", "title": "The American Opportunity Tax Credit: Overview, Analysis, and Policy Options", "summary": "The American Opportunity Tax Credit (AOTC)\u2014originally enacted on a temporary basis by the American Recovery and Reinvestment Act (ARRA; P.L. 111-5) and made permanent by the Protecting Americans from Tax Hikes Act (PATH; Division Q of P.L. 114-113)\u2014is a partially refundable tax credit that provides financial assistance to taxpayers (or their children) who are pursuing a higher education. The credit, worth up to $2,500 per student, can be claimed for a student\u2019s qualifying expenses incurred during the first four years of post-secondary education. In addition, 40% of the credit (up to $1,000) can be received as a refund by taxpayers with little or no tax liability. The credit phases out for taxpayers with income between $80,000 and $90,000 ($160,000 and $180,000 for married couples filing jointly) and thus is unavailable to taxpayers with income above $90,000 ($180,000 for married couples filing jointly). There are a variety of other eligibility requirements associated with the AOTC, including the type of degree the student is pursuing, the number of courses the student is taking, and the type of expenses which qualify.\nBefore enactment of the AOTC, there were two permanent education tax credits, the Hope Credit and the Lifetime Learning Credit. The AOTC replaced the Hope Credit (the Lifetime Learning Credit remains unchanged). A comparison of these two credits indicates that the AOTC is both larger\u2014on a per capita and aggregate basis\u2014and more widely available in comparison to the Hope Credit. Data from the Internal Revenue Service (IRS) indicate that enactment of the AOTC contributed to an increase in both the aggregate value of education credits claimed by taxpayers and the number of taxpayers claiming these credits. \nEducation tax credits were intended to provide federal financial assistance to students from middle-income families, who may not benefit from other forms of traditional student aid, like Pell Grants. The enactment of the AOTC reflected a desire to continue to provide substantial financial assistance to students from middle-income families, while also expanding the credit to certain lower- and upper-income students. A distributional analysis of the AOTC highlights that this benefit is targeted to the middle class, with approximately half (46.6%) of the estimated $17 billion of AOTCs in 2015 going to taxpayers with income between $30,000 and $100,000. \nOne of the primary goals of education tax credits, including the AOTC, is to increase attendance at higher education institutions (for brevity, referred to as \u201ccollege attendance\u201d). Studies analyzing the impact education tax incentives have had on college attendance are mixed. Recent research that has focused broadly on education tax incentives that lower tuition costs and have been in effect for several years, including the Hope and Lifetime Learning Credits, found that while these credits did increase attendance by approximately 7%, 93% of credit recipients would have attended college in their absence. Even though the AOTC differs from the Hope Credit in key ways, there are a variety of factors that suggest this provision may also have a limited impact on increasing college attendance. In addition, a recent report from the Treasury Department\u2019s Inspector General for Tax Administration (TIGTA) identified several compliance issues with the AOTC. \nThere are a variety of policy options Congress may consider regarding the AOTC. (The credit was not modified or changed in the recent tax law enacted at the end of 2017, P.L. 115-97.) Alternatively, Congress may want to examine alternative ways to reduce the cost of higher education. This report discusses these issues and concludes with an overview of selected proposals to modify the AOTC.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R42561", "sha1": "7b21496dfecd58652ade9b801310319774f2e126", "filename": "files/20180604_R42561_7b21496dfecd58652ade9b801310319774f2e126.html", "images": { "/products/Getimages/?directory=R/html/R42561_files&id=/2.png": "files/20180604_R42561_images_c2556a6827b20ac5fca570ed494d96661a5765c3.png", "/products/Getimages/?directory=R/html/R42561_files&id=/1.png": "files/20180604_R42561_images_5c27aa691d226f2251adade594b8776d2b2da7d4.png", "/products/Getimages/?directory=R/html/R42561_files&id=/0.png": "files/20180604_R42561_images_7c95da4bd95fd675f113f4f8981acb7ebd8954a2.png" } }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R42561", "sha1": "8240b12ee1df0b3ba0159e9fcd92763dccdda483", "filename": "files/20180604_R42561_8240b12ee1df0b3ba0159e9fcd92763dccdda483.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4799, "name": "Individual Tax" }, { "source": "IBCList", "id": 4824, "name": "Education, Family, & Housing Tax Policy" }, { "source": "IBCList", "id": 4838, "name": "Education Tax Benefits" } ] }, { "source": "EveryCRSReport.com", "id": 448915, "date": "2016-01-19", "retrieved": "2016-04-06T17:27:33.667211", "title": "The American Opportunity Tax Credit: Overview, Analysis, and Policy Options", "summary": "The American Opportunity Tax Credit (AOTC)\u2014originally enacted on a temporary basis by the American Recovery and Reinvestment Act (ARRA; P.L. 111-5) and made permanent by the Protecting Americans from Tax Hikes Act (PATH; Division Q of P.L. 114-113)\u2014is a partially refundable tax credit that provides financial assistance to taxpayers (or their children) who are pursuing a higher education. The credit, worth up to $2,500 per student, can be claimed for a student\u2019s qualifying expenses incurred during the first four years of post-secondary education. In addition, 40% of the credit (up to $1,000) can be received as a refund by taxpayers with little or no tax liability. The credit phases out for taxpayers with income between $80,000 and $90,000 ($160,000 and $180,000 for married couples filing jointly) and thus is unavailable to taxpayers with income above $90,000 ($180,000 for married couples filing jointly). There are a variety of other eligibility requirements associated with the AOTC, including the type of degree the student is pursuing, the number of courses the student is taking, and the type of expenses which qualify.\nBefore enactment of the AOTC, there were two permanent education tax credits, the Hope Credit and the Lifetime Learning Credit. The AOTC replaced the Hope Credit (the Lifetime Learning Credit remains unchanged). A comparison of these two credits indicates that the AOTC is both larger\u2014on a per capita and aggregate basis\u2014and more widely available in comparison to the Hope Credit. Data from the Internal Revenue Service (IRS) indicate that enactment of the AOTC contributed to an increase in both the aggregate value of education credits claimed by taxpayers and the number of taxpayers claiming these credits. \nEducation tax credits were intended to provide federal financial assistance to students from middle-income families, who may not benefit from other forms of traditional student aid, like Pell Grants. The enactment of the AOTC reflected a desire to continue to provide substantial financial assistance to students from middle-income families, while also expanding the credit to certain lower- and upper-income students. A distributional analysis of the AOTC highlights that this benefit is targeted to the middle class, with approximately half (47.8%) of the estimated $18 billion of AOTCs in 2013 going to taxpayers with income between $30,000 and $100,000. \nOne of the primary goals of education tax credits, including the AOTC, is to increase attendance at higher education institutions (for brevity, referred to as \u201ccollege attendance\u201d). Studies analyzing the impact education tax incentives have had on college attendance are mixed. Recent research that has focused broadly on education tax incentives that lower tuition costs and have been in effect for several years, including the Hope and Lifetime Learning Credits, found that while these credits did increase attendance by approximately 7%, 93% of credit recipients would have attended college in their absence. Even though the AOTC differs from the Hope Credit in key ways, there are a variety of factors that suggest this provision may also have a limited impact on increasing college attendance. In addition, a recent report from the Treasury Department\u2019s Inspector General for Tax Administration (TIGTA) identified several compliance issues with the AOTC. \nThere are a variety of policy options Congress may consider regarding the AOTC. Alternatively, Congress may want to examine alternative ways to reduce the cost of higher education. This report discusses these issues and concludes with an overview of selected proposals to modify the AOTC.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R42561", "sha1": "018f5541031bd22b87ec7194dfaf546f9d48df0b", "filename": "files/20160119_R42561_018f5541031bd22b87ec7194dfaf546f9d48df0b.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R42561", "sha1": "78fefb2758018ed75f5d5a5123d636ead86b8c1b", "filename": "files/20160119_R42561_78fefb2758018ed75f5d5a5123d636ead86b8c1b.pdf", "images": null } ], "topics": [ { "source": "IBCList", "id": 350, "name": "Individual and Family Tax Policy" }, { "source": "IBCList", "id": 479, "name": "Postsecondary Education" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc815696/", "id": "R42561_2014Jul28", "date": "2014-07-28", "retrieved": "2016-03-19T13:57:26", "title": "The American Opportunity Tax Credit: Overview, Analysis, and Policy Options", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20140728_R42561_8beb50ad0832e865dd3b9d382669b89663a6041c.pdf" }, { "format": "HTML", "filename": "files/20140728_R42561_8beb50ad0832e865dd3b9d382669b89663a6041c.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc332894/", "id": "R42561_2014Jul10", "date": "2014-07-10", "retrieved": "2014-08-27T12:47:05", "title": "The American Opportunity Tax Credit: Overview, Analysis, and Policy Options", "summary": "This report provides both an in-depth description of the American Opportunity Tax Credit, an analysis of its economic impact, and an overview of various policy options.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20140710_R42561_17b1abc79eb4c827615a8b153319cda157bd656b.pdf" }, { "format": "HTML", "filename": "files/20140710_R42561_17b1abc79eb4c827615a8b153319cda157bd656b.html" } ], "topics": [ { "source": "LIV", "id": "Taxation", "name": "Taxation" }, { "source": "LIV", "id": "Tuition tax credits", "name": "Tuition tax credits" }, { "source": "LIV", "id": "Educational finance", "name": "Educational finance" }, { "source": "LIV", "id": "Higher education", "name": "Higher education" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc87243/", "id": "R42561_2012Jun11", "date": "2012-06-11", "retrieved": "2012-07-03T07:51:21", "title": "The American Opportunity Tax Credit: Overview, Analysis, and Policy Options", "summary": "This report gives an overview of the American Opportunity Tax Credit (AOTC)\u2014enacted on a temporary basis by the American Recovery and Reinvestment Act and extended through the end of 2012 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010\u2014 which is a partially-refundable tax credit that provides financial assistance to taxpayers who are attending college, or whose children are attending college. There are a variety of policy options mentioned in the report regarding the AOTC, including extending the credit, extending a modified AOTC, or repealing the Hope and Lifetime Credits and extending a modified AOTC that includes provisions included in these credits.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20120611_R42561_cd20c91f741cd18af8eee51cd8f6836c0f89ec35.pdf" }, { "format": "HTML", "filename": "files/20120611_R42561_cd20c91f741cd18af8eee51cd8f6836c0f89ec35.html" } ], "topics": [ { "source": "LIV", "id": "Taxation", "name": "Taxation" }, { "source": "LIV", "id": "Tuition tax credits", "name": "Tuition tax credits" }, { "source": "LIV", "id": "Educational finance", "name": "Educational finance" }, { "source": "LIV", "id": "Higher education", "name": "Higher education" } ] } ], "topics": [ "Economic Policy", "Education Policy" ] }