With students back in school, the IRS says education tax breaks are there for the taking.
Parents of college students are being reminded there’s still time to take advantage of tax credits for qualified tuition and related expenses. The American Opportunity Tax Credit, part of the federal stimulus package, modifies the existing Hope credit for tax years 2009 and 2010. “Think of the American Opportunity Credit for 2010 like the old education credit on steroids. It increases the income limit; provides for the first four years of education instead of just two; and is worth more; and it’s partially refundable. It’s also per student, not per return.”
IRS Spokesman Christopher Miller says the Credit can be a valuable tax break for families with college students, so save your receipts. “The American Opportunity Credit can be up to $2,500 and can help defray a lot of the education expenses.”
Miller says one change allows 529 plan users to pay for a student’s computer-related technology needs such as Internet access. The full credit is available for taxpayers whose modified adjusted gross income is $80,000 or less — that’s $160,000 for joint filers.