Posted: Aug 22, 2010 4:21 PM by Matt Stafford
Updated: Aug 24, 2010 9:52 AM
Julian McNally just got in to Colorado Springs from Minnesota, and hasn't even had a chance to unpack; he's enrolling in school.
"A thousand miles, you know, a decent drive," McNally says. "I still have all my stuff in my car here." A bit of a rite of passage for college students -- moving with everything packed in the backseat. Also pretty typical of the college experience is spending money, and lots of it.
"I spent most of my summer working pretty hard so as far as money, I tried to save up a bunch for this kind of stuff," McNally explains.
A big move and starting class unfortunately makes McNally spend it faster than he made it. He tries to save where he can, but might get to save a little extra this tax season.
"Come income tax time, people are looking for every nickel and dime they can get back, and I don't blame them," says Duane Egbert, who runs Egbert's Tax Service in Colorado Springs, only Egbert says not everyone is paying attention to the American Opportunity Tax Credit -- a larger tax credit for students in their first four years of college.
"If they're not aware of it, they won't mention it," Egbert says.
Instead of the usual tax credits, (the Hope Tax Credit and the Lifetime Learning Credit) students with qualified expenses in tax years 2009 and 2010 can get the American Opportunity Credit. It saves up to $2,500 dollars when you get your tax return back and qualifies more people because of higher income limitations, but you have to file for it.
Egbert says some tax filing software will automatically tell you it's the better option, but you should pay attention to it this tax season. Like most school years, Egbert's guessing costs will go up.
That's what McNally is seeing.
"It's pretty much steadily gone up every year," McNally says.
After a summer working full-time, McNally doesn't might fighting through the costs to get his degree, but he'll take all the help he can get.
The American Opportunity Tax Credit only applies to qualified education spending in 2009 and 2010 for students who are in one of their first four years of college. Each student can receive up to $2,500 as long as they (or the person who claims them as a dependant on their filing) make less than $80,000 a year ($160,000 a year for married, joint filing, couples).
The Hope Tax Credit and the Lifetime Learning Credit are also available to college students beyond 2010.
For more information from the I.R.S. about the available tax credits, or to see if you qualify, click here.
The filing deadline for the 2010 tax season is April 15, 2011.