Education Credits, The New American Opportunity Credit

dreamstime_5315071For tax years 2009 and 2010 undergraduate students may qualify for the Hope Credit (now called the American Opportunity Credit) for four years instead of two and be eligible for a refund of this credit up to 40% of the credit. Also what qualifies as education expenses for the Hope Credit has been expanded. This is great news since the Hope Credit offers the largest amount of credit – up to $2,500.00 per student.

Previous to tax year 2009, this credit was only available for the first two years of undergraduate education, was not refundable, and was limited to $1,800.00 per student. Also previous to 2009 books and supplies for school did not count as part of qualified education expenses. Now for a student’s first four years at a qualified educational institution, the credit has been expanded to include both tuition expenses as well as books and supplies. (more…)