New 2009 College Tax Credit

For 2009 (and 2010, too) the Hope Education credit is replaced by the American Opportunity Credit. The new credit is worth $2,500 per student, based on the first $4,000 of qualifying educational expenses. The Hope Credit only allowed for an $1,800 tax break.

In addition to upping the credit amount, the American Opportunity Credit can be claimed for expenses for the first four years of post-secondary education, versus the first two years of expenses allowed under the Hope Credit .

More expenses can be counted in calculating the new credit. Its income limits are larger, meaning more folks making more money -- up to $90,000, or twice that for joint filers -- can claim at least a partial credit.

And if you claim the American Opportunity Credit but don't owe the IRS, you still might still get a refund. Forty percent of the credit if refundable, which means you could receive up to $1,000 even if you owe no taxes.

For more info, see

http://www.youtube.com/watch?v=8nocCGlkOyE

and

http://turbotax.intuit.com/tax-tools/tax-tips/college/5569.html