Education Finance Matters

Good News from the IRS about Your taxes

14th January, 2010 - Posted by Brendan - No Comments

Under the American Recovery and Reinvestment Act of 2009, many college students and their parents will be able to use the American Opportunity Tax Credit to offset college costs from 2009 and 2010.

This tax credit expands and renames the Hope Credit, which helps parents and students pay for post-secondary education, and can be claimed for qualified tuition and related expenses that was paid for higher education in 2009 and 2010.

The tax credit is equal to 100 percent of the first $2000.00 and 25 percent of the next $2000.00 spent per student each year. That means any eligible taxpayer who paid at least $4000.00 in qualifying expenses for an eligible student can receive the full $2500.00 credit.

Forty percent of the credit is refundable, which means even those taxpayers who owe no taxes can get up to $1,000.00 of the credit as cash back for each eligible student.

For those who earn less than $80,000.00 annually or $160,000.00 for married couples filing a joint return, the full credit is available. Those earning more than the cap will be eligible for a reduced tax credit. For more information, visit the official IRS website at www.irs.gov/recovery .

Of course, we recommend that you consult with your tax advisor for additional information and guidance regarding the American Recovery and Reinvestment Act of 2009.