Education items in the Stimulus Bill

[swimcatsmom]

<p>These have been posted previously but I thought I would post a quick summary for those that missed the earlier threads</p>

<p>Tax Credit - Expansion of the Hope tax credit (referred to as the American Opportunity tax credit - is not an additional credit but an expansion of the current Hope credit) for tax year 2009 and 2010. Increases it to $2500 a year (100% of 1st $2000 and 25% of the next $2,000), extends it to 4 years instead of 2, and makes 40% of it ($1000) a refundable credit - ie a credit you can get even if you have no tax liability. Extends the definition of qualified expenses for the credit to include required course materials such as books. Income limits before it starts phasing out $80k for single filers, $160k for joint filers.</p>

<p>Pell Grant - increased to $5350 for 2009-2010 school year. EFC cut off for Pell is 4617.</p>

<p>529 Account - for 2009 and 2010 tax years allows purchase of a computer and educational software and internet access costs as qualified expenses for 529 account withdrawals.</p>

<p>wording from the actual bill re 529 accounts
<a href=“a”>quote</a> IN GENERAL.—Section 529(e)(3)(A) is amended by striking
‘‘and’’ at the end of clause (i), by striking the period at the end
of clause (ii), and by adding at the end the following:
‘‘<a href=“iii”>B</a> expenses paid or incurred in 2009 or 2010 for the purchase of any computer technology or equipment (as defined in section 170(e)(6)(F)(i)) or Internet access and related services, **if such technology, equipment, or services are to be used by the beneficiary and the beneficiary’s family during any of the years the beneficiary is nrolled at an eligible educational institution.
Clause (iii) shall not include expenses for computer soft-
ware designed for sports, games, or hobbies unless the
software is predominantly educational in nature.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to expenses paid or incurred after December 31, 2008.

[/quote]
</p>

<p>For the Tax credit

AMERICAN OPPORTUNITY TAX CREDIT.
(a) IN GENERAL.—Section 25A (relating to Hope scholarship
credit) is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection:
‘‘(i)** AMERICAN OPPORTUNITY TAX CREDIT.—In the case of any taxable year beginning in 2009 or 2010— **
‘‘(1) INCREASE IN CREDIT.—The Hope Scholarship Credit
shall be an amount equal to the sum of—
‘‘(A) **100 percent of so much of the qualified tuition
and related expenses paid by the taxpayer during the tax-
able year (for education furnished to the eligible student
during any academic period beginning in such taxable year)
as does not exceed $2,000, plus
‘‘(B) 25 percent of such expenses so paid as exceeds
$2,000 but does not exceed $4,000. **
‘‘(2) CREDIT ALLOWED FOR **FIRST 4 YEARS OF POST-SEC-
ONDARY EDUCATION.**—Subparagraphs (A) and (C) of subsection
(b)(2) shall be applied by substituting ‘4’ for ‘2’.
‘‘(3) **QUALIFIED TUITION AND RELATED EXPENSES TO INCLUDE REQUIRED COURSE MATERIALS.**—Subsection (f)(1)(A) shall be applied by substituting ‘tuition, fees, and course materials’ for ‘tuition and fees’.
‘‘(4) INCREASE IN AGI LIMITS FOR HOPE SCHOLARSHIP
CREDIT.—In lieu of applying subsection (d) with respect to the
Hope Scholarship Credit, such credit (determined without
regard to this paragraph) shall be reduced (but not below
zero) by the amount which bears the same ratio to such credit
(as so determined) as—
‘‘(A) the excess of—
‘‘(i) the taxpayer’s modified adjusted gross income
(as defined in subsection (d)(3)) for such taxable year,
over
‘‘<a href=“ii”>B</a> $80,000 ($160,000 in the case of a joint return),
bears to **
‘‘(B) $10,000 ($20,000 in the case of a joint return).
‘‘(5) CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM
TAX.—In the case of a taxable year to which section 26(a)(2)
does not apply, so much of the credit allowed under subsection
(a) as is attributable to the Hope Scholarship Credit shall
not exceed the excess of—
‘‘(A) the sum of the regular tax liability (as defined
in section 26(b)) plus the tax imposed by section 55, over
‘‘(B) the sum of the credits allowable under this subpart
(other than this subsection and sections 23, 25D, and 30D)
and section 27 for the taxable year. Any reference in this section or section 24, 25, 26, 25B, 904, or 1400C to a credit allowable under this subsection shall be treated as a reference to so much of the credit allowable under subsection (a) as is attributable to the Hope Scholarship Credit.
‘‘(6) **PORTION OF CREDIT MADE REFUNDABLE.—40 percent
of so much of the credit allowed under subsection <a href=“a”>/B</a> as is
attributable to the Hope Scholarship Credit (determined after
application of paragraph (4) and without regard to this para-
graph and section 26(a)(2) or paragraph (5), as the case may
be) shall be treated as a credit allowable under subpart C
(and not allowed under subsection (a)). The preceding sentence
shall not apply to any taxpayer for any taxable year if such
taxpayer is a child to whom subsection (g) of section 1 applies
for such taxable year.

</p>

[milkandsugar]

<p>I’m sorry but I am tax info illiterate, but it looks like a good thing.</p>

[sueinphilly]

<p>reader’s digest version: a married couple with an AGI under 160K will be eligible for the entire 2500 tax credit assuming they’ve paid 4000 for tuition and books.</p>

<p>for a single person the AGI is 80K for maximum credit to be available</p>