Which of the following is a limitation regarding the American Opportunity Credit?

The American Opportunity Credit is designed to provide financial assistance for higher education expenses. A key limitation is that it is available for a maximum of four tax years for each eligible student, which is why the correct choice highlights that it is limited to two tax years. The confusion can arise because one might think that it can be claimed for the entirety of four years, but there are certain restrictions on how it’s utilized across multiple years.

The credit allows students to claim it for the first four years of higher education, but it phases out based on modified adjusted gross income. This means that individuals with higher incomes may be ineligible for the full benefit, but it does not imply a restriction of two tax years specifically due to income status.

When considering the other options, they present different limitations that do not accurately reflect how the American Opportunity Credit functions. Therefore, the focus remains on the specific limitation regarding the duration it can be claimed, emphasizing the credit's structure related to the educational phase for an individual.