Monday, March 8, 2010

American Opportunity Credit

Under the American Recovery and Reinvestment Act(ARRA),more parents and students will qualify over the next two years for a tax credit, the American Opportunity Credit, to pay for college expenses.

The new credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary (after high school) education years instead of two. Many will qualify for the maximum annual credit of $2,000 per student.

The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes about these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.

More information is available at IRS.gov. Look up Tax Benefits for Education and the American Recovery and Reinvestment Act of 2009.

Saving your money is equally important as winning scholarships so, be aware of every opportunity to save. April 15th is quickly approaching. Be sure to apply for this $2,000 credit if you are filing your own tax returns.

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