<p>Does anyone know about this? I read this on a Yahoo group, but no one on that group was familiar with this.
Thanks in advance!</p>
<p>FOR IMMEDIATE RELEASE: January 19, 2010
American Opportunity tax credit may help offset college expenses</p>
<p>OLYMPIA Students and families who had tuition and other college-related expenses in 2009 may be eligible to claim the American Opportunity tax credit when they prepare their federal income tax returns this year. </p>
<p>The full tax credit, which can be claimed for college expenses incurred during the 2009 and 2010 tax years, is available to taxpayers whose modified adjusted gross income is $80,000 or less ($160,000 or less for joint filers). A reduced credit amount is available to taxpayers with adjusted gross incomes up to $90,000 ($180,000 for joint filers). If a taxpayer's income level was not high enough during the year to incur federal income tax liability, up to 40 percent of the tax credit can be received as a refund.</p>
<p>American Opportunity replaces a similar tax credit provision called the Hope credit. The new credit of up $2,500 for tuition and eligible college expenses is higher than under the Hope provision. In addition, tax filers may now claim expenses incurred during the first four years of their postsecondary education rather than only the first two. </p>
<p>Depending on individual circumstances, the American Opportunity tax credit may not be the most advantageous tax option for all families with higher education expenses. For guidance, consult a tax expert or visit the HECB website (Higher</a> Education Coordinating Board) for links to additional information from the Internal Revenue Service.</p>
<p>It is just replacing and expounding upon what Clinton did with the Hope Credit. </p>
<p>You earn a certain amount a year and whatnot and can claim a rather low amount as a tax write off of sorts as such a thing pertains to higher education for a good four years give or take a thing or two.</p>
<p>I think that this is, in terms of taxes, a nice idea for those who pay out of pocket for community college and whatnot. I assume it wouldnot really make that much of a dent for the welthy or something, though. </p>
<p>Shame Suzie Ormond is not a member of this site, eh? I would make the world’s worse tax preparer:)</p>
<p>Yes it is a tax credit for 2009 and 2010 tax years that replaces the Hope tax credit. It can be claimed on 2009 tax returns for education expenses incurred in 2009, and on 2010 tax returns for education expenses incurred in 2010. The credit reduces your taxes (parent taxes if the student is a dependent on their tax return) by up to $2500 depending on general eligibility and the amount of money spent on qualified education expenses in the appropriate tax year. Up to $1,000 of it may be refundable (meaning you can get $1000 back even if there is no tax liability).</p>
<p>Just wanted to post a heads up. The way this credit is handled in the tax form is very different from the former Hope Credit or the Tuition Credit. With this one, up to 1500 is handled in the credit portion of the tax form and the other 1000 is handled with the taxes you have already paid. I know this strange way through me when I was using a tax preparer program because they said we only got 1500 in credit. That was because the other 1000 was added to the total which was withheld from wages.</p>
<p>That is because $1000 of the credit is a refundable credit so is reported on a different part of your tax return. A refundable credit is added to taxes witheld so you get it paid to you whether or not you actually owe any taxes.</p>
<p>The 1500 is not refundable (meaning you must have a tax liability of $1500 to get it) so is shown with other non refundable credits.</p>
<p>On your return the 1500 reduces your tax liability. The 1000 is treated as you have actually paid it and then you are given a “refund” for overpayment. You are still getting $2500 (if you were eligible for the full $2500).</p>