Hope Tax Credit
In the effort to defray the ever increasing cost of higher education, Congress has passed the American Recovery and Reinvestment Act to help pay for college expenses.
Availability begins in tax year 2009 and can be claimed for tax years 2009 and 2010.
This new credit modifies the existing Hope credit, and widens the circle of eligibility.
The credit itself is for a maximum of $2500.
The full credit is available to individuals whose modified gross income is $80,000 or less, or $160,000 for married couples filing a joint return.
The credit is then phased out for taxpayers with incomes above those levels.
These income levels are higher than under the existing Hope credit and seeks to expand the number of qualified taxpayers.
The credit itself is non-refundable, which means that it can reduce to owed taxes to zero, but if the credit is more than tax owed the excess will not be refunded to a taxpayer.
The Hope credit is thus limited by the amount of any given taxpayers income and the amount of tax thus owed.
The Hope credit can generally be claimed if all three of the requirements are met: 1) qualified education expenses are paid for higher education; 2) the education expenses are paid for an eligible student; and 3) the eligible student is either the taxpayer, the spouse or dependent of the taxpayer.
This is a stand alone credit - meaning that either the Hope credit or a deduction for tuition and fees are taken for the same student in the same year.
Other credits or deductions may be applicable, but either the Hope credit or a deduction are generally taken by many taxpayers.
At a time when the average cost of a private four year institution is higher than $35,000 and the average cost of a public four year institution is more than $13,000 we all have to ask ourselves if credits that maximize at less than 10% of the private cost of that education is the best the federal government can do to help.
Additionally, the vast majority of entry level positions now require at least a bachelors degree.
Is it any wonder that 85% of all college graduates now immediately move back in with mom and dad after that degree is attained? If a measure of society lays in how its young is educated, the US certainly has opportunity for most.
However, that most must be able to borrow, borrow and borrow more to achieve that education.
Of course, we all have to wonder what jobs are out there to help these young people earn enough to pay those student loans off.
Availability begins in tax year 2009 and can be claimed for tax years 2009 and 2010.
This new credit modifies the existing Hope credit, and widens the circle of eligibility.
The credit itself is for a maximum of $2500.
The full credit is available to individuals whose modified gross income is $80,000 or less, or $160,000 for married couples filing a joint return.
The credit is then phased out for taxpayers with incomes above those levels.
These income levels are higher than under the existing Hope credit and seeks to expand the number of qualified taxpayers.
The credit itself is non-refundable, which means that it can reduce to owed taxes to zero, but if the credit is more than tax owed the excess will not be refunded to a taxpayer.
The Hope credit is thus limited by the amount of any given taxpayers income and the amount of tax thus owed.
The Hope credit can generally be claimed if all three of the requirements are met: 1) qualified education expenses are paid for higher education; 2) the education expenses are paid for an eligible student; and 3) the eligible student is either the taxpayer, the spouse or dependent of the taxpayer.
This is a stand alone credit - meaning that either the Hope credit or a deduction for tuition and fees are taken for the same student in the same year.
Other credits or deductions may be applicable, but either the Hope credit or a deduction are generally taken by many taxpayers.
At a time when the average cost of a private four year institution is higher than $35,000 and the average cost of a public four year institution is more than $13,000 we all have to ask ourselves if credits that maximize at less than 10% of the private cost of that education is the best the federal government can do to help.
Additionally, the vast majority of entry level positions now require at least a bachelors degree.
Is it any wonder that 85% of all college graduates now immediately move back in with mom and dad after that degree is attained? If a measure of society lays in how its young is educated, the US certainly has opportunity for most.
However, that most must be able to borrow, borrow and borrow more to achieve that education.
Of course, we all have to wonder what jobs are out there to help these young people earn enough to pay those student loans off.
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