College Tax Credit may be Extended


President Obama wants the college tax credit to be extended to cover all 4 years of college. If this move is approved by Congress, it would mean savings of up to $10,000 in fees for some families. Under the American Opportunity Tax Credit this year, families can claim for any of the frst four years of college education. The amount of credit will come up to the full initial $2,000 spent on each student per year and 25% of the next $2,000. This brings the total credit to $2,500 and will be given to the taxpayer who has to pay up to $4,000 in college fees.

But in his 2011 budget, President Obama has inserted a provision to allow the American Opportunity Tax Credit to continue and also be expanded to cover a student’s junior and senior years. This is aimed at making the US the country with the highest proportion of college graduates in its population by 2020.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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