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American Opportunity Tax Credit Details

Posted By Jim On 02/14/2009 @ 7:40 am In Education | 190 Comments

CNNMoney [3] has broken down the details of the latest stimulus package and has the following to say about the American Opportunity Tax Credit, which was a refundable credit pushed heavily by Pennsylvania Representative Chaka Fattah (D):

New temporary college credit: The bill introduces the American Opportunity Tax Credit, which would be in effect for 2009 and 2010. It expands the existing Hope Scholarship tax credit [4] and would be worth as much as $2,500 for higher education expenses, up from $1,800 currently.

The full credit would be available to those making less than $80,000 ($160,000 for joint filers). Those making between those amounts and $90,000 ($180,000 for joint filers) would get a partial credit. And the break would also be partially refundable, meaning lower income families with little or no tax liability could now claim some of the credit. Estimated cost: $13.9 billion.

The stimulus package also has another education related tax break, the Pell Grant has been increased to $5,350 for 2009 and $5,550 for 2010; an increase of $500 in both cases.

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[3] CNNMoney: http://money.cnn.com/2009/02/13/news/economy/stimulus_individuals/index.htm

[4] Hope Scholarship tax credit: http://www.bargaineering.com/articles/education-tax-credits-hope-lifetime-learning-credits.html

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