Do you want to know more about how to get education tax credits? The American Recovery and Reinvestment Act of 2009 made BIG changes to education tax credits! Do you qualify?
Check out what the IRS has to say:
American Opportunity Credit (AOC) – This credit changes the existing Hope Credit for tax years 2009 and 2010. That means the Hope Credit is now available to a more taxpayers, including many with higher incomes (and those who owe no tax!). You may be able to take a credit of up to $2,500 for qualified education expenses paid… for each student in your household who qualifies! If you don’t owe any tax, remember that up to 40% of this credit may be refundable. Remember, the only way to claim this credit is to file a tax return (even if you aren’t required to), so be sure to file!
Hope Credit – The Hope Credit benefits those paying for the first two years of qualifying tuition and related expenses. This credit may be worth even more if at least one qualifying student attended a school or university in a Midwestern disaster area. For these students, there is an expanded definition of qualifying expenses and the credit is worth up to $3,600! Note, however, that unlike the American Opportunity Credit, the Hope Credit is not refundable. So it can reduce your taxes to $0, but won’t be refunded to you. Remember that you can’t take the American Opportunity Credit and Hope Credit on the same tax return, so figure out the one that applies best to your situation.
Lifetime Learning Credit – For 2009, taxpayers may be able to claim a lifetime learning credit of up to $2,000 ($4,000 for students in Midwestern disaster areas!) for qualifying education expenses paid for students enrolled in eligible educational institutions. There’s no limit on the number of years you can claim the lifetime learning credit for each student, and no limit to the number of students. Keep in mind that you can’t claim the Hope, American Opportunity and Lifetime Learning credit for the same student in one year, though.
For more information about these credits (and others!) click here.
Tags: Tax Tips
This entry was posted on Thursday, February 18th, 2010 at 11:58 AM and is filed under Tax News. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
