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Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
You may be able to recoup some of your college costs through a tax credit. Don't Miss the Opportunity to Recoup College Costs Through Your Taxes By Britt Erica Tunick Few things are pleasant about taxes or deciphering U.S. tax codes. But for anyone footing the bill for the first four years of a college education, the 2015 Congressional spending bill permanently implemented a combined four year tax credit of up to $10,000 per child to offset those costs. Known as the American Opportunity Tax Credit (AOTC), the bill, which was initially introduced in 2009 and was set to expire at the end of 2014, allows for a credit of up to $2,500 per year, for up to four years, for anyone paying the costs of a college education who earns $80,000 or less ($160,000 or less for married couples who file joint tax returns). According to the tax credit, individuals paying for college are eligible for a credit of 100% for the first $2,000 of qualifying tuition expenses and then another 25% of the next $2,000 of education expenses paid for that child during any one tax year. In cases where the tax credits take an individual tax payer’s taxes down to zero, these individuals are eligible to have 40% of the remaining amount of credit of up to $1,000 refunded to them. In order to for students to be eligible for the credit, they must: be enrolled at least half time for at least one semester during the tax year at an accredited academic institution where they are pursuing a degree or an education credential; must not have completed their first four years of higher education at the beginning of the tax year; and must not have a felony drug conviction at the end of the tax year. |
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