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Education Tax Breaks

Free Legal Help > Personal Finance Legal Help > Taxes > Tax Relief 2009 > Education Tax Breaks

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The American Recovery & Reinvestment Act (ARRA) includes provisions to give college students and their parents financial help with the cost of education. 

  • The American Opportunity Tax Credit: This new tax credit provides up to $2,500 on qualified education expenses (tuition and books, for example).  It's similar to the existing Hope credit, which provides a tax credit of up to $1800 for the first two years of college.  However, the new American Opportunity tax credit can be used more than twice, and the amount of the credit is higher.  Specifically, it provides a 100% credit for the first $2,000 and 25% for the next $2,000 of qualified expenses.
  • 529 Plans and Computer Expenses:  A 529 plan is a savings plan with tax benefits.  Previously, a person could not use 529 plan funds for a college student's computer equipment expenses.  The ARRA temporarily grants computer expenses as an eligible deduction from a 529.  This means that a computer could be tax free when bought for a student of higher education, and paid with 529 plan funds.

 



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This content is for information only and may be incomplete. It is not intended to be legal or tax advice.
You are encouraged to consult with your own attorney, accountant or other advisor.



 
     
 
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