||Mom and Dad, we know this is a tough time of year, but you can make it. We are here to give you some motivation and a little tax saving advice as you watch your child go to college. Sending your child off to college can be a daunting task. First, you have the emotional struggle of watching your young child grow up and become an adult.
Your child will make decisions such as where to eat and when and if they go to class without you (maybe for the first time in their life). (Don’t worry Dad, there won’t be any parties!) That can be a challenge enough, but when you consider a $26,273 average tuition at a four-year private school, the trip to college just became an emotional heartache and a financial nightmare.
You can rest a little easier as Uncle Sam is here to help.
The American Opportunity Tax Credit, part of the federal stimulus package passed a year ago, can be claimed for qualified expenses in 2009 and 2010. You have the ability to claim a credit while you pay for qualified tuition and related expenses that you pay for higher education in 2009 and 2010.
The credit is equal to 100 percent of the first $2,000 spent per student each year and 25 percent of the next $2,000. Simply put, you could get a credit of $2,500 if you spend $4,000 or more in qualifying expenses for an eligible student.
If you are like me and grab your wallet anytime a college student is within a football field distance of me or my bank account, then this may not be that comforting. What is $2,500 when I’m starting at $26,000? If your child is going to a public university this $2,500 could be more appealing as this average tuition rate is $7,020.
Hopefully you have been able to save a little money as your scholar was growing up and are now looking forward to an easy journey full of pep rallies and cramming for finals. If you haven’t had the luxury of saving for college education you still have hope in the form of free money! You and your student may qualify for other education credits, too - be sure to consult your local tax advisor for help determining which credit is best for your situation.
Have your child make it their full-time job to search for grants, scholarships and grant aid. If Junior, takes as much time to surf the net looking for ways to save on college as he does texting his friends or playing on Facebook then he should be able to find ways to get some of the tuition lowered including room and board, and books and supplies.
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.