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IRS educating taxpayers about tax benefits for education


  (AP Photo/Dita Alangkara)

There is a new section to the Internal Revenue Service (IRS) website that helps educate and clarify the benefits available to those advancing their education.
The special section provides information regarding a variety of education deductions and credits and serves as a one-stop location for information regarding tax benefits for higher education.

One example of the type of information available is the American Opportunity Credit, created as part of the 2009 American Recovery and Reinvestment Act, modified the Hope Credit for the 2009 and 2010 tax years. The adjustment to the credit allows more Americans to benefit because of expanded income guidelines. Also there is an addition expense that is included in the list of qualified expenses: required course materials.

The maximum annual credit is $2,500 per student and can be a sizeable tax benefit for many eligible taxpayers. The credit, however, does begin to phase out for those with modified adjusted gross incomes (AGI) above $80,000, or $160,000 for married couples filing a joint return. These income limits are higher than under the Hope Credit.

According to the IRS, 40 percent of the American Opportunity Credit is refundable, That means that those owing no tax may still get an annual payment of the credit of up to $1,000 for each eligible student.

The IRS site also includes information on the Lifetime Learning Credit, various tuition and fees deductions, 529 plans, student loan cancellation, among other benefits.

Taxpayers should consult professional tax advisers for full details, including benefit eligibility and use.

For more information about topics of interest to graduate students, check out:

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Janelle Jalbert is the founder of Edusistance and the creator of the Race to College Success program. She has been an educator and advisor for more than a decade. You can reach Janelle by email, follow her on Twitter @RacetoCollege or @edusistance, and add yourself as a fan of the Race to College Success Facebook page.