From Carol McAtee’s CPA firm in St. Petersburg, FL – The American Opportunity Tax Credit (AOTC) was created in February 2009 as part of the American Recovery and Reinvestment Act. For the tax year 2010, taxpayers with tuition expenses can receive a tax credit of up to $2,500 per student. Up to $1,000 per year of this amount is refundable. This new credit replaces the Hope Scholarship credit for the tax years 2009 and 2010. The AOTC can reduce the cost of college substantially because it is available for four years of college, whereas the Hope credit was only available for the first two years of higher education.
The credit is computed as 100 percent of the first $2,000 in tuition and 25 percent of the next $2,000. Therefore, the full $2,500 credit may be available to taxpayers who pay $4,000 or more in tuition expenses for eligible students. The credit was recently extended through the tax year 2012.
Contact us at McAtee & Associates if you have any questions regarding your income taxes and to see if you qualify for the tax credit allowing you to reduce your college expenses.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
