Disclaimer of Liability
The information in this e-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice,
accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used
as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or
taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular
situation.
The author of the tax articles in this e-newsletter did not intend nor write the advice to be used to avoid any penalty imposed by a
taxing authority, nor may any user/recipient of this document use this document's written tax advice for that purpose. This document's
tax advice was written specifically to support the promotion or marketing of the transaction/matter addressed by the written tax advice.
Therefore, any user/recipient of this document should seek an independent tax professional's advice regarding the user/recipient's
particular circumstances.
The information is provided "as is" with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and
without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for
a particular purpose.
The information in this e-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice,
accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used
as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or
taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular
situation.
The author of the tax articles in this e-newsletter did not intend nor write the advice to be used to avoid any penalty imposed by a
taxing authority, nor may any user/recipient of this document use this document's written tax advice for that purpose. This document's
tax advice was written specifically to support the promotion or marketing of the transaction/matter addressed by the written tax advice.
Therefore, any user/recipient of this document should seek an independent tax professional's advice regarding the user/recipient's
particular circumstances.
The information is provided "as is" with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and
without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for
a particular purpose.
| Serving the Central Pennsylvania area since 1981 |
| Robert A. Romako, CPA |
| TAX CHANGES FOR HIGHER EDUCATION |
The American Recovery and Reinvestment Act, signed this past February, made some significant
changes to the tax laws surrounding higher education expenses. With many students now
heading back to college, now may be a good time to review some of those changes.
The Hope credit, which applied to the first 2 years of college expenses, has been replaced by
the American Opportunity tax credit. This new credit applies to the first 4 years of college
education, provided the student is enrolled at least half-time. The credit is worth up to $2,500 per
student per year; if the credit reduces your income tax liability to zero, then 40% of the excess
credit is refundable. The best part of the credit is that many more taxpayers will qualify to claim it.
Single filers can claim the credit if their adjusted gross income is below $80,000 (the limit used to
be $50,000 for the Hope credit) or $160,000 for joint filers (the limit had been $100,000 for the
Hope credit). The American Opportunity tax credit is in place for 2009 and 2010; President
Obama wants to make it a permanent credit.
For those of you with Section 529 college savings plans, the definition of eligible expenses for
tax-free withdrawal has been expanded to include charges for computer technology, equipment,
and internet access. Previously, computers had to be required by the college in order to qualify
as an education expense.
The American Recovery and Investment Act also increased the maximum Pell Grant to $5,350
for 2009/2010 and to $5,550 for 2010/2011. President Obama has proposed having the Pell
grant program subject to automatic cost-of-living increases each year, rather than negotiating the
increases through Congress.
Finally, President Obama has proposed the elimination of the FAFSA application, and to instead
have parents apply for financial aid through a “check the box” option on the parents’ Federal
income tax return. Watch this newsletter for further developments on this topic.
changes to the tax laws surrounding higher education expenses. With many students now
heading back to college, now may be a good time to review some of those changes.
The Hope credit, which applied to the first 2 years of college expenses, has been replaced by
the American Opportunity tax credit. This new credit applies to the first 4 years of college
education, provided the student is enrolled at least half-time. The credit is worth up to $2,500 per
student per year; if the credit reduces your income tax liability to zero, then 40% of the excess
credit is refundable. The best part of the credit is that many more taxpayers will qualify to claim it.
Single filers can claim the credit if their adjusted gross income is below $80,000 (the limit used to
be $50,000 for the Hope credit) or $160,000 for joint filers (the limit had been $100,000 for the
Hope credit). The American Opportunity tax credit is in place for 2009 and 2010; President
Obama wants to make it a permanent credit.
For those of you with Section 529 college savings plans, the definition of eligible expenses for
tax-free withdrawal has been expanded to include charges for computer technology, equipment,
and internet access. Previously, computers had to be required by the college in order to qualify
as an education expense.
The American Recovery and Investment Act also increased the maximum Pell Grant to $5,350
for 2009/2010 and to $5,550 for 2010/2011. President Obama has proposed having the Pell
grant program subject to automatic cost-of-living increases each year, rather than negotiating the
increases through Congress.
Finally, President Obama has proposed the elimination of the FAFSA application, and to instead
have parents apply for financial aid through a “check the box” option on the parents’ Federal
income tax return. Watch this newsletter for further developments on this topic.
SEPTEMBER 1, 2009 Newsletter Article
| Robert A. Romako, CPA Phone:717.774.3047 |