More students eligible for tax credit

For the 2009 and 2010 tax years, a broader range of students will qualify for tax credits to help offset the cost of higher education.

Under the American Recovery and Reinvestment Act, the existing Hope Credit has been replaced by the American Opportunity Credit. The AOC has been expanded to incorporate students or parents with higher income levels and to those who owe no tax.

In addition, students or parents can claim the new tax credit for the first four years of postsecondary tuition, rather than just the first two as defined by the Hope Credit. Also, qualifying expenses covered by the credit have been expanded to include required course materials.

“[The AOC] is a tax incentive for students or parents who are claiming dependents to receive additional tax credits,” said David Kahl, Creating Assets, Savings and Hope Oregon volunteer.

Under the AOC, the maximum annual credit is $2,500 per student. Students or parents with an annual of less than $80,000, or less than $160,000 for married couples, are eligible for the tax credit, according to the Internal Revenue Service Web site.

According to Kahl, the tax credit is calculated dollar for dollar for up to $2,000 of the cost of tuition and qualifying expenses paid during the 2009–10 school year. For an additional $2,000 worth of expenses, taxpayers will receive a credit of 25 percent. This is a $700 increase from the Hope Credit, according to the IRS Web site.

The AOC has expanded the qualifying expenses to include any cost that is required for additional enrollment, such as lab fees or books, Kahl said.

According to Kahl, taxpayers who choose to claim the tuition and fees tax deduction on their returns may not claim the AOC. 

Taxpayers enrolled in graduate school are not eligible for the AOC, however, there are several additional credit opportunities, including the Lifetime Learning Credit, Kahl said.

CASH Oregon provides free tax preparation for students, as well as for low-income families and individuals. For PSU students seeking tax services, CASH Oregon’s office is located in room 360 of the School of Business Administration. They will offer free services for PSU students until April 11, and are open on Saturdays from 9 a.m. to 5 p.m. and Sundays from noon to 5 p.m. Their office will be closed on March 20–21 and March 27–28.

For more questions regarding CASH Oregon, call Student Legal and Mediation Services at 503-725-4556.