Hmm..maybe my tax refund will be better this year?

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jlee

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Sep 12, 2001
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http://articles.moneycentral.m...ion-rebate.aspx?page=1
Millions of students and parents struggling to raise cash for college this fall could have a happy surprise early next year: a tax credit of up to $2,500.

The new higher-education tax credit, which was part of the stimulus bill signed into law in February, is expected to put hundreds, if not thousands, of dollars into the pockets of millions of Americans who write tuition checks this year. Better yet, students don't have to fill out any extra financial-aid applications to get the new money. They just file their tax returns.

"This will definitely help people," says Jackie Perlman, an analyst for H&R Block's Tax Institute.

Of course, like most things in the federal tax code, the rules are a little complicated. But experts such as Perlman say the new credit is bigger and more inclusive than previous higher-education tax credits, which were so complicated that more than a quarter of eligible taxpayers failed to get a penny, and those who were able to collect typically got less than $900.

You can claim 100% of your first $2,000 spent in 2009 on tuition, fees or course materials. You can claim 25% of the next $2,000 spent on the same things. So if you have $4,000 in course-related expenses, you can take $2,500 off whatever you owe the Internal Revenue Service. If you earn so little that you don't owe the IRS that much, then the government will send you a check for 40% of whatever extra credit you qualify for, up to a maximum of $1,000.

I dropped about $4k in tuition this year. The credit is for people going to school at least half-time - I am full time this spring & summer, and will finish my degree (AA) in September.

However, I don't have a 529 account (wtf is that?). Can anyone explain very briefly in layman's terms? :eek:
 

jlee

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Sep 12, 2001
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Originally posted by: alexjohnson16
Does this apply to the 2009-2010 school year only, or is it applicable after Jan. 1?

No idea...
 

mcmilljb

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May 17, 2005
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Originally posted by: JLee
However, I don't have a 529 account (wtf is that?). Can anyone explain very briefly in layman's terms? :eek:
It's a college savings plan - link

This was an interesting bit of information on the IRS website.
It also adds required course materials to the list of qualifying expenses...
Those students who have to buy an ipod for their journalism class will be able to use that as a qualifying expensive if they buy one this year.


Also tax credits don't pay for college. FAIL

Grants and scholarships do. WIN
 

jlee

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Sep 12, 2001
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So do I need a 529 account in order to claim the credit? I'm paying for everything out of pocket...no special accounts.

I have some research to do..
 

mcmilljb

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May 17, 2005
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Originally posted by: JLee
So do I need a 529 account in order to claim the credit? I'm paying for everything out of pocket...no special accounts.

I have some research to do..

No. They were discussing a special case.

Keep all receipts for your college expenses. You will be able determine and claim the correct amount when the time comes. Your school will send you a form at the end of the year, but you still want to know exactly what you paid them and for what.

If you're interested in getting the most out of your tax filing, consider picking up a book on taxes. It's ungodly boring, but it will help you understand what options are available. Once you know how it works and what's available, you just look online for that year's information. Consider it an investment in taking your money back from the government :)
 

Bateluer

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Jun 23, 2001
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Originally posted by: HardcoreRobot
in other news, average tuition nationwide spikes by nearly 2000

Wouldn't surprise me.

How does this relate to the Hope Credit?
 

mcmilljb

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May 17, 2005
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Originally posted by: Bateluer
Originally posted by: HardcoreRobot
in other news, average tuition nationwide spikes by nearly 2000

Wouldn't surprise me.

How does this relate to the Hope Credit?

Tuition probably could go up $2000 but the credit itself didn't go up $2000 itself. The 2008 Hope Credit is $1800 so it's getting a $700 boost for 2009 and 2010.

In other words, the government decided you need an extra $700 in 2010 and 2011 :)

This won't help poor people because they probably will not use much of the tax credit. It would help the struggling middle class though. What they should have done to help students(and their parents) is increase the eligibility of the Hope Credit to 4 years. That would help people getting 4 year degrees.
 
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