<p>I have this memory that when S1 was a freshman, we chose the deduction that was good for only the first two years of college (Hope line??), then we switched to another deduction during his junior year. </p>
<p>This year we have a freshman and a senior. Do we have to do the same thing for both kids or can you do Hope for one kid and the alternative deduction for the other?</p>
<p>The Hope does not currently exist. It was replaced in 2009 by the American Opportunity Tax Credit. Did you not claim the AOC for your senior last year? The AOC is currently available for 4 years of college. It is a credit of up to $2500 a year for each student of which $1000 may be refundable. Initially the AOC was only going to be for the 2009 and 2010 tax years. it was extended in that last minute tax deal at the end of 2010. I am not sure how long for though (I’m thinking 2 years but might be off on that).</p>
<p>IRS publication 970 is the relevant tax publication.</p>
<p>See a tax professional! Don’t use software from a box, don’t go to H & R Block, but use an accounting firm, maybe someone you know uses one? </p>
<p>A CPA or Public Accountant can runs numbers different ways & determine which scenario is better for you financially. I work for a CPA & she does this for people all the time. She makes a lot of money amending returns from do it yourself software people & the H & R Block returns. It is worth the money to see a tax professional.</p>
<p>We have used one of the tax software programs and it also runs multiple scenerios with regards to these credits.</p>
<p>I use the software but run all the numbers myself to see which gets me the best credit. Having read the IRS 970 rules thoroughly I pretty much know what to expect.</p>
<p>But if you are not comfortable with doing it yourself go to a CPA rather than one of the big store front companies. I did the training to work with one (passed it all but didn’t end up working there as I had major issues about the usurious tax refund loan practices). I discovered that I knew a heck of a lot more about the ins and outs of education tax benefits than I learned in their training program.</p>
<p>And I found out that unless you have a really simple return (in which case do it yourself) they often charged more in than a CPA does</p>
<p>If you paid at least $4,000/child in 2010, you should be able to get the $1500 Education Credit, PLUS the $1000 American Opportunity Credit for EACH dependent, provided your income does not exceed the limit (around $160,000). I am an accountant (but not a CPA) at a CPA firm, and just completed my taxes yesterday, with one of our CPAs reviewing my forms/numbers. We did use the “Education Optimization” feature of our software, and this was by far the better way to go (gives more $ than using the tuition and fees deduction on page 1 of the 1040). And he said the new educations credits have been extended through at least 2011.</p>
<p>
?? There is not a $1500 education plus a $1000 American Opportunity Credit. The American Opportunity Credit is a $2500 credit of which up to $1000 may be a refundable credit.</p>
<p>On page 2 of the 1040 the education credits are separated into the 2 items, but not on form 8863 used in computing the credit. (Lines 49 and 66 of 1040.) Confusing, to be sure.</p>
<p>It is one tax credit. it is called The American Opportunity tax credit. The 2 parts are computed together on form 8863 because they are part of the same credit. The 2 parts are shown separately on the 1040 because part is a refundable credit and part is not. But they are both part of the same tax credit. The information is available on IRS publication 970.</p>
<p>
</p>
<p>Thank you, all! I am printing off your comments and will refer to them as I move through this year’s forms.</p>
<p>Have fun :D</p>
<p>Here is the HTML link [Publication</a> 970 (2009), Tax Benefits for Education](<a href=“Publication 970 (2022), Tax Benefits for Education | Internal Revenue Service”>Publication 970 (2022), Tax Benefits for Education | Internal Revenue Service)</p>
<p>and</p>
<p>here is the PDF link <a href=“http://www.irs.gov/pub/irs-pdf/p970.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/p970.pdf</a></p>
<p>Both versions have clear flow-charts that help you determine which options you qualify for, and both have a table that lets you compare the credit and the deduction.</p>
<p>Good luck!</p>
<p>I believe Swimcatsmom is correct…there is ONLY one credit…only one…and the limit is $2500.</p>
<p>Yes, good note of clarification - just don’t be surprised when you don’t find a $2500 credit on page 2 of your 1040, as mine is separated into $1500 (line 49) and $1000 (line 66) and they are called 2 different things.</p>
<p>The $1000 is the refundable part of the American Opportunity credit. The $1500 is the non refundable part of the American Opportunity credit.</p>
<p>Mishmom…I would suggest you discuss what you are posting here with the CPAs in your office. My tax accountant was VERY clear…there is ONLY ONE college tax credit…as Swimcatsmom described. What you are saying makes it sound like there are two different tax credits and that simply isn’t true.</p>