Facts of the Month

Talk to your accountant about education tax credits

For those of you with current college students, be sure you talk to your accountant as you prepare to file your taxes for 2009 to make certain you claim any education tax credits for which you are eligible. For 2009 and 2010 only, Congress modified the Hope Credit tax code to provide the American Opportunity Credit which allows families to claim up to 100% of the first $2,000 in qualified college expenses and 25% of the next $2,000, for a total credit of $2,500 (if you pay $4,000 or more out of your own pocket for qualified expenses). What's more, the credit can be claimed for any of the first four years of college (rather than just the first two as is the case with the Hope Credit) AND 40% of the tax credit is refundable (so even if you don't owe any federal income tax, you can possibly get up to $1,000 for each student who is eligible for the credit, and for whom you paid qualifying expenses). For more on this and other education tax benefits, visit the IRS website at http://www.irs.gov

Publication Date: January 2010