The American Opportunity Tax Credit
The American Opportunity Credit was created by The American Recovery and Reinvestment Act. You may be wondering what all of this means to you.
Well, the American Opportunity Credit is an educational tax credit. This tax credit actually expanded the Hope Credit. The Hope Credit helps parents and students help pay for college expenses and tuition.
The Value of this Tax Credit
Students can claim this tax credit for tuition and certain related expenses. Here’s an amazing fact: this credit can be claimed for expenses paid for any of the first four years of post-secondary education.
The American Opportunity Credit is worth up to $2,500. This is based on a percentage of the cost of qualified tuition and expenses. The important word in the last sentence is “qualified.”
Make sure the expenses you are claiming are qualified or else it’s a big oops. The good news is the qualified list has expanded to include related expenses like materials, books, supplies, and materials required for the course. If you need that expensive math calculator for the algebra class you have to take, it can go the list of expenses.
Finances and Percents
The credit is not available for individuals who make more than $90,000 or $180,000 for joint filers. For those who qualify, they will receive a tax credit based on 100% of the first $2,000 of tuition, fees and course materials. In addition to that, you will receive 25% on the next $2,000 of tuition, fees and course materials.
College Tuition Tax Deductions
Qualifying Expenses
You can go to the web site of the IRS to get a complete list of qualifying expenses. Claiming items that are not allowed is like a giant, red flag waving to the IRS for an audit and nobody welcomes that kind of attention. Speaking of audits, how would you like to avoid one? If you use tax software, for example, TurboTax Online, the tax software actually has an audit alert system built right into the software that will warn you if you made an error that flags an audit. Doesn’t that sound good?
Online Tax Preparation Software
If you’re a student, and are new at filing a tax return, you will love online tax software. Parents will love the tax software too. The tax program will search for over 350 deductions and will guide you like a GPS system through all of the educational tax credits.
The Hope Scholarship Education Tax Credit
College is expensive enough already. I’m sure you want to claim every educational tax credit you qualify for. Wouldn’t it be disappointing to miss out on receiving thousands of dollars because you just didn’t know the educational tax credit was available for you to claim? Don’t let this happen to you. Visit TurboTax Online Today!
