For those who have had college expenses in 2009 or 2010, the IRS says there is still time to take advantage of tax credits for qualified tuition and related expenses.
The American Opportunity Tax Credit is part of the Ameri?can Recovery and Reinvestment Act of 2009 and can help many parents and college students offset college costs.
?This credit can be claimed for qualified tuition and related expenses such as books and other required course materials in 2009 and 2010,? said IRS spokesman Michael Devine.
The credit can be claimed for qualified expenses paid for any of the first four years of post-secondary education. It is equal to 100 percent of the first $2,000 spent per student each year and 25 percent of the next $2,000.
Therefore, the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualifying expenses for an eligible student.
The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return. The credit is gradually reduced, however, for taxpayers with incomes above these levels.
Forty percent of the credit is refundable, so even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back.
?You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit,? Devine said.
?You must choose to either take the credit or the deduction and should consider which is more beneficial for you.?
For more information about a variety of tax credits, deductions and savings plans available to assist with the expense of higher education, visit: www.irs.gov.