Editor,
If you’re one of those folks trying to balance a job while getting a college education, filing federal income tax forms probably hasn’t been a huge priority.
As part of the federal stimulus bill enacted in 2009, Congress passed the American Opportunity Credit (AOC) for the 2009-10 tax years. AOC’s purpose is to make higher education more affordable for students and low-income families who otherwise may not be able to attend college.
This legislation expanded the Hope Credit, which applied only to the first two years of college. The AOC, however, is available for students pursuing an undergraduate degree who are in their first four years of college. Earning limits have been raised.
Filers may be eligible for AOC if they:
Had an adjusted gross income in 2010 less than $80,000 for an individual.
Had an adjusted gross income in 2010 less than $160,000 if married.
Paid for “qualified tuition and related expenses,” whether for themselves, spouse or dependents, at an eligible educational institution.
Are immigrants who are resident aliens for tax purposes.
AOC covers tuition and course-related materials. These materials include books, supplies and equipment needed for a course of study, whether the materials are purchased from the educational institution as a condition of enrollment or attendance.
AOC doesn’t cover expenses such as room and board, transportation, medical bills and child care. Tuition is the amount paid after tax-free contributions have been subtracted, such as scholarships, Pell grants, veteran’s assistance, fellowships and employee assistance.
Eligible educational institutions include colleges, universities, vocational schools and accredited schools eligible to participate in the Student Aid program of the U.S. Department of Education.
Visit the U.S. Department of Education website if you are not sure whether your school qualifies.
The AOC is worth up to $2,500 of the cost of tuition and expenses paid during 2010 — that’s $700 increase from the Hope Credit’s maximum.
In addition, AOC provides a refundable credit worth up to $1,000, meaning students may qualify to receive up to $1,000 even if they owe no taxes. If students owe taxes, the credit is used to reduce tax liability.
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For students not pursuing a degree, the Lifetime Learning Credit is still available at any point in their post-secondary education. Students who claim an education credit may also qualify to claim the Earned Income Tax Credit and Child Tax Credit, if they qualify.
To claim your AOC or Lifetime Learning Credit, you must use IRS form 8863. This form must be attached to your 1040 or 1040A form.
Kwaku Sraha
UNM student
