Available Tax Credits for Higher Education.
If you are thinking or already attending a college, university or a graduate school, then you should know about several educational tax credits that you can claim on your personal income tax return. If you are a dependent, your parent(s) can claim those credits on their personal income tax return. This article addresses The American Opportunity Credit.
• You can claim The American Opportunity Credit tax credit on form 8863* for tuition and certain school fees paid for higher education in 2009 and 2010.
• This credit can be claimed for expenses paid for any of the first four years of post-secondary education.
• In order to completely benefit from this tax credit, your income (modified adjusted gross income) must be $80,000 or less – for single filers and $160,000 or less – for joint filers. If you make over these amounts, this tax credit will start to decrease accordingly.
• You can claim up to $2,500 a year. It’s based on a percentage of the cost of qualified tuition and related educational expenses paid during the taxable year for each eligible student.
• Qualified tuition and related expenses also include, expenses paid for required course materials: books, supplies and equipment required for a course of study.
• If you do not owe any taxes for 2009 or 2010, you still can receive forty percent or up to $1,000 of the credit for each eligible student as cash refund.
Form 8863, Education Tax Credits
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