With unemployment in El Paso County reaching 8.6 percent in March, as reported by The Gazette April 17, people looking for work might find the smart strategy is to go back to school and learn new job skills.That seems to be the trend at the Falcon Pikes Peak Community College campus, which opened last fall.Tony Kinkel, PPCC president, said enrollment at the Falcon campus has grown 8 percent this spring.Kinkel said Falcon students favor courses in natural resources management and equine science and agriculture; the latter has a student waiting list.Tim Griffin, PPCC’s executive director of strategy management, said the Falcon campus has a larger proportion of students under the age of 20 and over age 50 when compared to other PPCC campuses.Griffin said the business transfer program, which earns credits that transfer directly to a four-year college, is also popular with Falcon students.While tuition at community colleges such as PPCC is low compared to four-year colleges, the cost of attending classes at a PPCC campus is still a fair chunk of change.According to the PPCC course catalog, the average cost per semester credit for a Colorado resident is $81. Sixty credits are required to receive an associate degree, for an average total of $4,860, and that doesn’t count additional fees and the cost of books.To make college more affordable, the economic stimulus plan passed by Congress in February includes a new federal tax credit, the American Opportunity Tax Credit. The tax credit covers $2,000 spent on college tuition, plus 25 percent of the next $4,000 spent on college tuition, for a maximum of $2,500.According to www.irs.gov, the full AOTC is available to individual taxpayers whose modified adjusted gross income is $80,000 or less ($160,000 for joint filers) who claim one or more qualified students as dependents on their tax return.A gradual reduction in the AOTC (called a phase-out) is available for individual taxpayers whose MAGI is between $80,000 and $90,000 ($160,000 to $180,000 for joint filers).The AOTC is an expansion of the existing Hope tax credit, which only applies to college freshmen and sophomores. The AOTC adds juniors and seniors to the list but excludes postgraduate students.Up to $1,000 of the AOTC is refundable, which means if the AOTC reduces a taxpayer’s federal income tax to zero, the remainder of the tax credit is refunded to the taxpayer.In most cases, the Hope tax does not count books as a qualified education expense, but the AOTC does.The AOTC is available for the 2009 and 2010 tax years.For the 2008 tax year, the Hope tax credit was increased to 100 percent of the first $1,200 spent on tuition for a freshman or sophomore and 50 percent of the next $1,200, for a total of $1,800 per qualifying student.To qualify for the Hope tax credit, a student must be pursuing an undergraduate degree or other recognized education credentials and enrolled half time for at least one academic period during the year. The student must not have a felony drug conviction on his or her record. The IRS has not indicated whether the provision will also apply to the AOTC.For 2008, the full Hope tax credit was available to individual filers whose MAGI is less than $48,000 a year ($96,000 for joint filers), with a phase-out for individual taxpayers whose MAGI is between $48,000 and $58,000 ($96,000 to $116,000 for joint filers).Another credit, the Lifetime Learning tax credit, allows taxpayers a 20 percent deduction of up to $10,000 in tuition or fees paid to an educational institution. The credit is available for an unlimited number of years for any student attending the first four years of postsecondary education or taking courses to acquire or improve job skills.Under the Lifetime Learning credit, the student only needs to take one course, which benefits people who are working and attending college. A drug-free record is not a requirement.A 2007 study by the Brookings Institute found that one third of about 8 million taxpayers eligible for an education tax credit didn’t file for it.According to an article posted at www.usnews.com, “IRS data show the average Hope or Lifetime Learning tax credit is about $780 … less than one-third the average annual cost of tuition and fees charged by community colleges, the lowest-priced colleges in the country.”The stimulus plan also increased funding – to $17.1 billion – for Pell grants and raised the maximum grant from $4,850 to $5,350 per student. Unlike student loans, Pell grants do not have to be repaid.Other education tax credit tips from the IRS:
- With the exception of schools in the Midwest disaster area, room and board does not qualify as an education expense.
- To claim an education tax credit, the student must be the taxpayer, the taxpayer’s spouse or claimed as a dependent.
- The Hope and Lifetime Learning tax credits cannot be claimed by anyone married filing separately or by nonresident aliens. The IRS has not yet published rules for the AOTC.
- Only one type of education tax credit can be claimed per student.
- Unlike the AOTC, the Hope and Lifetime Learning tax credits are not refundable.
- Scholarships for tuition are not taxable but payment of that tuition cannot be used to generate an education tax credit. (Joseph Hurley at www.bankrate.com)
