COLLEGE TAX CREDITS EXPANDED FOR 2008-2009
The Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (part of H.R. 1424) was signed into law on October 3, 2008. This bill doubled the maximum Hope and Lifetime Learning Credits for 2008 and 2009 for students attending eligible institutions in the Presidentially-declared Midwest Disaster Area. The maximum Hope credit is increased to $3,600 and the maximum Lifetime Learning credit is inceased to $4,000 for those who qualify.
The Hope credit applies to students in their first two years of post-secondary education, such as college or vocational school. The Lifetime Learning credit applies to undergraduate, graduate and professional degree courses, including instruction to acquire or improve job skills, regardless of the number of years in the program.
Students attending eligible institutions in selected counties in 10 midwestern states are affected. The ten states are: Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska and Wisconsin. Caution: not all counties (and therefore, schools) in these states are included.
Here's how to find out if your school qualifies:
- Find out the county in which your school is located.
- Follow this link for a listing of the eligible counties, by state, to see if your school is in one of the listed counties: http://www.irs.gov/pub/irs-drop/n-08-109.pdf. The list begins on Page 4. Please note that, while the Midwest Disaster Area references the states of Kansas, Michigan and Minnesota, there are no eligible counties listed. Therefore, any institution is those 3 states is not eligible.
- If your school falls within a qualifying county, and you are otherwise eligible for these tax credits, the amount of your available tax credit is doubled.
- As an additional benefit, the definition of "qualifying expenses" (tuition, fees and required books, supplies and equipment) has been expanded for these institutions only to include reasonable costs of room and board. Conditions and requirements apply.
As a brief example, we found that the following institutions fall within the listed counties: Lake Forest College, College of Lake County (IL), Indiana University (Bloomington), Purdue University, University of Iowa, Iowa State University, Marquette University and University of Wisconsin (Madison & Milwaukee).
Qualified tuition and fees (as expanded) expense must have been paid by December 31, 2008 to qualify for 2008 tax treatment. To maximize this expanded benefit you will need to have paid in $4,800 for the Hope credit or $10,000 for the Lifetime Learning credit. Contact us for guidance if you are not sure how to choose the right amounts to maximize your tax benefit.
If your school doesn't qualify:
Contact us to learn how proper tuition cash management can increase your education tax benefits by as much as 25%. This program is available to all students, at any school, that qualify for education tax credits or deductions.
