<p>Thank you, sryrstress. Upon reflection, and now that I have that answer, I’m going to go ahead and have D file for the refund. It shouldn’t take more than 15 minutes of her time, even with all the schedules (I thought California’s return was bad :eek:). I told her this morning that I was re-thinking the decision not to file simply because in the future, when she runs into a problem, she won’t be able to just opt out; she’ll have to figure it out and file. So this will be good practice, and she’ll get $23 for her trouble. She agreed. :)</p>
<p>Remember, she can choose the freefile option from IRS.gov (on the left side). she will get her choice of tax prep software. It should be free for her to file and she can efile this way too. No cost.</p>
<p>thumper, good to know for next year. For 2009, she’s going to skip filing federal. Her earned income was less than $700, and she had no FIT withheld. Indiana does not require a federal return in order to file for the state refund.</p>
<p><a href=“http://www.in.gov--I%5B/url%5D”>www.in.gov–I</a> think she can also file free from that site. It’s at the top right. You are correct about the Midwestern Disaster area benefits.</p>
The AOC credit is 100% of the first $2,000 and 25% of the second $2,000 for a maximum of $2,500 of which $1,000 is refundable. The Lifetime Learning credit is 20% of the first $10,000 for a maximum of $2,000. AOC also has higher income limits. The Hope credit is no longer available unless you’re in a midwest disaster area. </p>
<p>So…unless you can’t take the AOC, it would be better to take AOC over LLC. If you are a grad student, or not enrolled full time, then you would take the LLC.</p>
<p>So now you’re down to seeing whether the AOC is better than the tuition deduction. It almost always is, except in those cases where you would get a $4,000 tuition deduction which can also reduce your state tax. That would mostly happen only with the LLC so I’m guessing you’re going to end up with the AOC.</p>
<p>Edit: I see that you are in a Midwest Disaster Area, so do Hope instead. But for everybody else, the rest of this post applies.</p>
The Hope is the one that is extra if your student is in a Midwestern Disaster Area. If your child is a 1st or 2nd year student in a midwestern disaster area then that may be the best one to take depending on all the circumstances. Things to keep in mind:
You can not take the Hope and the AO if you have more than one child. It is one or the other.
The income cut offs are lower for the Hope.
The Hope is non refundable (ie you cannot get more back than your total tax liability). The AO is partially refundable.</p>
<p>You all are REALLY helping me sort this out; thank you so much! </p>
<p>D is an only child, so we don’t have that complication. </p>
<p>I see that the Hope is only for the first 2 years. If we do the Hope this year and next year, will we then be able to switch to the AOC for junior and senior years? I thought I read somewhere that once you choose a method for a given student, you’re stuck with that method till the end, but I could be hallucinating that one.</p>
<p>Yes you would be able to change in future years if the AOC is still around (currently it is just for 2009 & 2010 tax years). The education credits let you choose the one you are eligible for that is most beneficial to you for the current tax year.</p>
<p>OK swimcatsmom. I’m also going to figure the deduction on Form 8917. I wouldn’t bother, except that her housing is a qualified expense. Then I’ll just plug-and-chug, and see what happens.</p>