Education Looks Hot With $2500 Obama Tax Credit – Refundable American Opportunity Tax Credit
This is an old article.
Here is an updated article about the $2,500 American Opportunity Tax Credit.
The stimulus package added all kinds of excellent benefits for people in the United States. Among those new tax credits is a $2500 tax break for going to college. Those who spend more than $4000 in a single year on their education will get a $2500 tax credit which is 40% refundable. (Up to $1000 cash back).
HIGHER EDUCATION TAX CREDIT This credit covers up to $2,500 of the cost of college tuition and other related expenses in 2009 and 2010. You’ll need to spend at least $4,000 in a single year to get the full credit. The credit begins to phase out for individual taxpayers with adjusted gross incomes over $80,000 or $160,000 for married couples filing jointly.
American Opportunity Tax Credit-
Applies to tax years 2009 and 2010
AMENDS the Hope credit as follows:
*Amount increased to 100% of the first $2,000 in expenses
*Amount increased to 25% of next $2,000 in expenses
*Annual limit increased to $2,500
*Timeframe increased to first FOUR years of postsecondary education
*”Qualified tuition and related expenses” amended to include “required course materials” (i.e., books, etc)
*AGI limits increased to $80,000 ($160,000)
*AOTC CAN be claimed against AMT
*Up to 40% of the qualified credit is refundable
This tax cut alone makes an investment in the for-profit college industry a no-brainer. Students will get as much as $1500 off their tax burden and $1000 back as a rebate, assuming they have no tax burden, increasing the incentive to go to school. For parents who take the credit for their kids, college aged students will see a windfall of $2500.
Going back to college has become popular as unemployed persons are finding better luck in the schoolroom rather than in the job hunt. Additional classes or a finished degree just might give many future employees a better chance at scoring the job.
I’m looking at DeVry as an excellent way to benefit off this tax credit. Its one of the few for-profit education centers with many different colleges and campuses for virtually every study. The company has done very well in this job market and is growing at a 25% annual clip and is sure to do even better as more people go back to school.
Other Tax Articles That Might Strike Your Fancy:
Changes to the IRS Cost Basis for 2011, 2012, 2013
$2500 College Tax Credit Explained
1603 Alternative Energy Grants and Bonus Depreciation
Changes to the 2012 1099
$1000 Retirement Savings Contribution Credit
If I recently graduated college and currently in debt up to my neck, will I be eligible for this $2500 tution tax credit?
What good is a tax credit that applies only to the Hope credit?!
Only a student who is in his first 2 years of college can take a Hope credit.
Students in their third and fourth year(or fifth in a 5-yr program) are not eligible for this $2,500. Where is the help for THEM?
“AMENDS the Hope credit as follows:
…
*Timeframe increased to first FOUR years of postsecondary education”
This is how it would be helpful to college juniors and seniors.
I am filing my taxes now and am only getting a $4000 credit to knock down my tax liability(?) to $0 but nothing refundable even though my college exepenses for this year were $23,000. I really want that cash refund…..
what if you recieve full financial aid, ie loans, and my mom doesn’t pay any of my tuition. will she still be able to get this?
@bahhumbug
Stop your whinning……
Jay yes, as long as you accumalated the tution in 2009, your will be able to take the credit.
@bahhumbug After the Hope Credit, you can use the Lifetime Learning Credit. Hope this helps!!!
Do Master’s students get this tax credit?
@bahhumbug
Other than HOPE credit, there is the life-time learning credit which is eligible to almost everyone.
Do Master’s students get this tax credit?
Inform appropriate!!!! Anybody know of a honest lender that YOU as far as one is concerned possess tempered to in the past? Essential recommendations fast.
From my understanding, masters, phd, and medical school will not be elgible for this tax credit? So, no help for the most expensive educations and students with the most debt?
Can i get a return as a student even if i had no income and paid no taxes???
I honestly don’t think so since you don’t have a tax liability.@warren
My son was a full-time student in Spring 2009 (his last semester in college). Being a diligent person, my wife wrote the check (over $10,000) for that last semester on December 26, 2008, but it was TO PAY FOR Spring 2009 (she just wanted to make sure not to miss the payment deadline). Does the fact that the check was dated 2008 (JUST DAYS BEFORE 2009!) disqualify us for the American Opportunity Credit? That seems so unfair…
i spend $21000 every semeter on my tution and now am about to file for my taxes……i only work $2000 for the whole year……..i wanna known if i still qualified for the $2500 because the one who is filing my tax for said i was suppose to work $12000 and above to qualified for the $2500.
I have taken classes from a few different schools since 2000. I have never received a degree and recently went back to school. I am taking 1st and 2nd year classes for an associates degree and I’m starting 3rd and 4th year classes for a bachelors. Am I eligible for this credit even though I’ve attended school in the past?
Another question: can I choose to enter the amount invoiced each year by my university as opposed to what I actually paid? I paid ahead, but I would love to just put the amount invoiced on 2009, then the amount invoiced in 2010. Anyone know the possibilities?
will the lifetime learning credit make me eligable for the 2500 if i am taking master’s courses?
My 1098T has an amount of 5100.00 but 3500.00 of that was actually paid with student – can I still claim the full 5100.00?
you are wrong….american opprtunties credit is for 4 years……I hate when people talk and do not know the facts………
okay… instead of asking each other, why not pick up the phone and call the IRS? <_<
just wanted to know that if we do get the money will we have to use this money in any way that we chose….
@bahhumbug
You already got your help leave some for the rest of us that are just starting out….greedy
All I know is that I work at a big biotherapeutic company in Clayton NC and I endroce Barack Obama with all my being. I encourage all my friends and colleagues to say yes for Obama in 2012!! I LOVE YOU OBAMA