Steve goes to tri-state university and pays $40,000 in tuition. steve works to pay for his schooling and has an agi of $37,000.

how much is his american opportunity tax credit?

His American Opportunity tax credit is $2,500.

Explanation:

A taxpayer who has a modified adjusted gross income of $80,000 or less can claim the credit for the qualified expenses of an eligible student.

Taxpayers will receive a tax credit based on 100% of the first $2,000, plus 25% of the next $2,000 that is paid during the taxable year for tuition, fees and course materials and also, 40% of the credit (up to $1,000) is refundable.

Therefore, His American Opportunity tax credit is $2,500.

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