American Opportunity Tax Credit |
By Sybria White on March 30, 2010
College expenses, like costs in many other sectors, are steadily rising and it is becoming more and more difficult to cover these expenses. Books, tuition, and computers are just a few of these rising costs that make school so expensive. We can try and save money but, larger economic factors are makes it difficult to control education costs. For instance choosing to go to school in-state to lower tuition or choosing a state institution instead of a private institutions, are good ways to save money, however these strategies are not enough when tuition prices are rising everywhere. Luckily, there is a new tax credit to make this situation a little easier to bear.
The American Opportunity Tax Credit is a partially refundable tax credit detailed in Section 1004 of the American Recovery and Reinvestment Act of 20091.This tax credit was originally called the Hope tax credit, but was renamed the American Opportunity Tax Credit and expanded to coincide with recent economic changes. This expansion lead to an increase in the tax credit’s worth and the number of years the tax credit is applicable to. The Hope Tax Credit was only applicable to tuition and certain expenses from your first two years of college, however The American Opportunity Tax credit is now applicable to those same expenses, for all four years of college2. This tax credit can be claimed for tuition and certain fees you pay for higher education in 2009 and 20103. Tax payers who pay tuition and who have modified adjusted income is less than $80,000 a year are eligible for the American Opportunity Tax Credit4. In addition to tuition and related educational expenses in some cases a computer may be covered by the tax credit. You can find out more information about the American Opportunity tax credit and the expenses it covers.
This tax credit is just one way to compensate for the rising educational costs that students face today. Please refer to the links below for more ways to cope.
Sources:
1: http://en.wikipedia.org/wiki/American_opportunity_tax_credit
http://www.irs.gov/newsroom/article/0,,id=211309,00.html
2-4: Tax Benefits for Education: Information Center
<http://www.irs.gov/newsroom/article/0,,id=213044,00.html>
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