Education Tax Credits Help Families

American Opportunity Tax Credit

The American Opportunity Tax Credit, offsets the cost of tuition fees, course-related books, supplies, and equipment for higher education by reducing the amount of income tax you are liable for. In addition, the credit is partially refundable—meaning that you may be able to claim the tax credit and receive a check from the IRS even if you no income tax.  The amount of the credit can be up to $2,500 per student. Up to $1000 of the credit can be refunded to you if your credit is more than the amount of tax you owe. You are eligible for credit if your modified adjusted gross income is $90,000 or less (for married couples filing joint return, $180,000 or less). The amount of the credit varies depending on income and how much you spent on higher education expenses, and how many eligible students are in your family.

American Recovery and Reinvestment Act of 2009.  The credit is available for all four years of undergraduate study.  

The amount of the credit is 100% of the first $2,000 in qualified expenses and 25% of the second $2,000.  It is available to families with a joint income less than $180,000 or single parent households with an income less than $90,000 (credit begins to be phased out for joint incomes ranging from $160,000-$180,000 and single incomes between $80,000-$90,000). In addition, the credit is only available to permanent residents or U.S. citizens and, if tax-filers are married, to those that file a joint tax return. 

Additionally, for the 2009 and 2010 tax years, the term "qualified tuition and related expenses" has been expanded to include expenditures for "course materials." For this purpose, the term "course materials" means books, supplies, and equipment needed for a course of study whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance

Lifetime Learning Tax Credit

The Lifetime Learning Tax Credit is also available for qualified tuition and related expenses for students enrolled in eligible educational institutions. The actual amount of the credit depends on a family's income, the amount of qualified tuition and fees paid, and the amount of certain scholarships and allowances subtracted from tuition. This credit is family-based (up to $2,000 per tax return) rather than based on the number of dependents in a family as with the Hope Tax Credit. (some income cut-offs do apply).

Arcadia University will provide a 1098-T form online, for tax filing purposes, to each student enrolled at the University for each calendar tax year.

Tuition and Fees Tax Deduction

The Tuition and Fees Tax Deduction can reduce taxable income by as much as $4,000. This deduction is taken as an adjustment to income and may benefit taxpayers who do not qualify for either the Hope or Lifetime Learning Education Tax Credits. Up to $4,000 may be deducted from tuition and fees required for enrollment or attendance at an eligible postsecondary institution.

Families who think they may qualify should contact their tax accountant or visit the IRS information page on the credit at  http://www.irs.gov/formspubs/article/0,,id=177996,00.html.

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