Money for College: Three Important Benefits to Remember for
the 2010 Tax Filing Season
By
Michael Scott, CPA
Even though the American Recovery and Reinvestment
Act of 2009 was signed into law over 10 months ago, many people may overlook
valuable college assistance grants and credits as they prepare for the upcoming
tax filing season. Here are the details regarding the three
important benefits you will not want to miss:
- Pell Grant: The maximum for these
need-based grants will increase by $500 to $5,350 per student
for the 2009-2010 year and to $5,500 for the 2010-2011 year.
- Tax Credit: For college expenses
in 2009 and 2010, the Hope Tax Credit has been replaced by the
American Opportunity Tax Credit. Individuals making less than
$80,000 and families with incomes less than $160,000 are
eligible for the credit, which has doubled; it covers up to
$2,500 of tuition and related expenses for 2009 and 2010. To
receive the full benefit allowed, you must spend a minimum of
$4,000 each year, 40% of which is refundable.
- 529 Plan Expansion: The money you
withdraw from a 529 college savings plan can be used for
pre-determined expenses such as tuition, room, board and books.
In 2009 and 2010, the money can also be used for computers and
computer technology, including educational software and internet
service – often overlooked expenses of the 529 plan
participants.
If you have a college student as I do, please do not
overlook these valuable benefits.