Gather Little by Little

As a general rule, I typically oppose almost all federal government spending on anything other than the responsibilities expressly outlined in our Constitution. I believe that such expenditures result in waste, corruption, debt and a limiting of the right to “life, liberty and the pursuit of happiness”. Much of government sponsored financial aid has really only served to drive up the price of a college education and increase the amount of our national debt. That said, if the government makes such money available, you should probably take advantage.

If you are considering a return to college, graduate school or have a child in college, the American Recovery and Reinvestment Act includes an additional tax break for you. It is called the American Opportunity Tax Credit. The AOTC is actually an adjustment to the existing Hope Credit that has reimbursed people for college expenses for several years now.

Who qualifies?

If your individual modified adjusted gross income is $80,000 or less or if you are married and file jointly, you can make up to $160,000 and still qualify.

When?

The tax credit only applies to tax years 2009 and 2010, however, the number of graduate years covered by this credit has been increased from two to four. To take advantage of the credit, you need to act now and if you are considering a second master’s degree . . . this is your chance to get some help.

What is covered?

In the past, the Hope Credit only covered tuition. The American Opportunity Tax Credit, which will credit 100% of a student’s first $2000 in tuition, fees, and course materials, and 25% of the next $2000. So, depending on income level, you might qualify for as much as $2,500.

What items are not covered?

Expenses such as insurance, medical expenses, room and board (with some exceptions),transportation, or similar personal, living, or family expenses.

You can read more about this tax credit here and here. Hope this saves you some cash!  – Article by Stew –

Photo by Jim Linwood