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Expanded College Tuition Tax Credits

The American Opportunity Credit Helps Pay for First Four Years of College

More parents and students can use a federal education credit to offset part of the cost of college. This credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Here are some of its key features:

  • Tuition, related fees and required course materials, such as books, generally qualify.
  • The credit is equal to 100 percent of the first $2,000 spent and 25 percent of the next $2,000.
  • The credit is reduced or eliminated for taxpayers with incomes above certain income levels.
  • Forty percent of the credit is refundable.
  • Married persons filing separate returns don?t qualify.
  • The credit is only allowed for the first four tax years of a post-secondary education.
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