Tax Credit College Tuition
August 3rd, 2010
Question: The American Recovery and Reinvestment Act states that students get a tax credit up to $2,500….?
It states that up to 40 percent ($1,000) is refundable, and can be received as a credit in the form of a rebate if you do not owe on your taxes. Does this mean that if I pay college tuition I should get at least $1,000 back at the end of the year?
Answer: This replaces the Hope credit and is possible for 4 years of school.
1. Spend $4000 on undergraduate tuition Get a $2500 credit. You use it first to pay taxes, but if you don’t owe tax, up to $1000 can be refunded anyway. Books may or may not be counted (save your receipts).
The calculation is 100% of the first $2000 and 25% of next $2000.
2. The school must be eligible.
3. The credit goes on the same tax return as the exemption. If you are a student subject to kiddie tax, you will NOT be eligible.
4. Income must be less than the cutoff. $80K for singles. $160K for MFJ.
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