Extra tax credits for education, energy available.
Taxpayers have some increased, or new, tax breaks available this year, and the National Endowment for Financial Education wants to make sure they know.
First, an education tax credit that used to be called the Hope Credit has been renamed the American Opportunity Credit and expanded, according to the 30-year-old financial education non-profit. This is a tax credit for up to $2,500 spent on tuition and related expenses during the taxable year, according to the Internal Revenue Service. It can be claimed for each of four years of college.
Taxpayers receive a 100 percent credit for the first $2,000 of expenses claimed under this program, and a credit of 25 percent of the next $2,000 spent on tuition, fees and course materials.
If, for example, the taxpayer spent $2,100 on qualifying tuition, fees and course materials, they could claim a credit of $2,025. This would reduce the taxes owed by $2,025. If the tax credit is more than the taxpayer owes the IRS, they get a refund of up to 40 percent of the tax credit they're claiming.
A single taxpayer who has a modified adjusted gross income of $80,000 or less ($160,000 for joint filers), is eligible for the full credit. The credit is reduced if your income is between $80,000 and $90,000 ($160,000 and $180,000 for joint filers) and eliminated after that.
The IRS defines "adjusted gross income" as income from wages, interest on savings, etc., minus the deductions the IRS allows. "Modified" means that it also includes foreign income you might be receiving.
The credit is claimed on a Form 8863. For more information, go to www.irs.gov or pick up IRS publication 970, which describes this and other tax benefits for education. The IRS also has a video on YouTube explaining the tax credit.
There are also two new energy-related tax credits for consumers for 2009:
Non-business Energy Property Credit. If you installed energy-efficient windows or doors or added high-efficiency heating or cooling equipment to your home in 2009, you may be able to get back up to 30 percent of the cost - up to $1,500 for 2009 and 2010 combined, according to the financial education foundation.
Residential Energy Efficient Property Credit. Alternative energy equipment such as solar electric systems, solar hot water heaters, geothermal heat pumps and wind turbines may give you another credit. You can get back up to 30 percent of the cost of these items, if you meet the IRS requirements.
Other home improvements that could qualify for tax credits include, skylights, insulation, central air conditioning and heating. For more information go to www.energystar.gov. or the IRS YouTube video on alternative energy credits.
|Printer friendly Cite/link Email Feedback|
|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Mar 21, 2010|
|Previous Article:||Falcons secure softball sweep.|
|Next Article:||Establish a routine to back up your data.|