Withholding and American Opportunity Tax Credit

Forum|Forum|6 years ago
February 3, 2020
1 reply
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I think this answer is obvious, but I want to double check. With the American Opportunity Tax Credit, the rules say that up to $1,000 can be refunded if this credit brings our tax liability down to 0. These refund/liability totals are regardless of what I've had withheld, correct? In other words, if I'm due a refund because I overpaid withholding (but still had a net liability for the year), that has no bearing on the AOTC, correct? There's no need to think about adjusting withholding specifically to make sure I don't lose qualifying for the AOTC, right?

M

MinhT1

You are correct. The non-refundable part of the AOTC can only reduce your tax liability to 0. It refers to your tax liability, and not your refund or tax due.

For a definition of tax liability, please read this.

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