Education Tax Credits, Part I

Tax and Money Tip of the Week
Education Tax Credits, Part I
November 2, 2011 | No. 66

The American Opportunity Tax Credit

With the current weak economic conditions, many people are considering additional education to refresh skills or acquire new ones.  In the next several weeks, we will discuss several tax breaks that may be available to you if you are going back to school or sending a child off to college. 

Here is a brief overview of the American Opportunity Tax Credit and how it can be a real benefit to help ease the burden of higher education costs.

  • Maximum credit of $2,500 per eligible student
  • Up to $1,000 of the credit is “refundable” if no tax is due
  • Credit is limited to couples with modified adjusted gross income (MAGI) and phases out completely at $180,000 if married filing jointly, $ 90,000 if filing single, head of household or qualified widow(er)
  • Available only for the first 4 years of postsecondary education
  • Available only for 4 tax years per eligible student (including any year(s) the Hope Credit was claimed)
  • An eligible student is defined as one that is pursuing an undergraduate degree or recognized education credential and is enrolled at least half time
  • Qualified expenses are tuition and fees required for enrollment, course related books, supplies and equipment
  • Payments include those made in 2011 for academic periods beginning in 2011 and in the first three months of 2012.

Call us if we can help you determine if you qualify.  More on Education Credits next week.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®

…until next week.

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