Back-To-School Tax Breaks
Many of us sent kids off to college last month, and some of us even returned to school ourselves. Coincident with the start of the new school year, the Internal Revenue Service announced the launch of an interesting back-to-school feature on its website. If you have (or will soon have) kids in college, you will want to take a look at the new “Tax Benefits for Education” section on www.irs.gov.
The section highlights a number of tax breaks intended to help parents and students pay for higher education. In addition to describing how to take advantage of deductions and credits that have been in place for some time, the section features two significant changes that will be in effect just for 2009 and 2010.
The first change expands Section 529 plans to permit expenditures for a student’s computer equipment and computer-related services, such as software and Internet access. Previously, the qualified expenses were limited to tuition, fees, books, supplies, equipment, special needs services and, for those enrolled at least half-time, room and board.
The second change is called the “American opportunity credit” and is designed to help students pay for the first four years of college. It expands the existing Hope credit, making it available to more families and adding course materials to the list of qualified expenses.
LeClair Flaherty
In addition to the new Web section, you can find out more about school-related tax breaks in IRS Publication 970, Tax Benefits for Education. Download it from www.irs.gov or call 1-800-TAX-FORM (829-3676) to have a copy sent to you.