Catch a Bigger Tax Break on College Expenses This Year

ALBANY, NY (02/13/2010)(readMedia)-- Tax time is fast approaching and Uncle Sam has enhanced and expanded the tax credit for students and families paying college expenses in 2009. The New York State Higher Education Services Corporation (HESC) reminds taxpayers to use these tax benefits that can help defray overall college costs. HESC is the State agency that helps people pay for college.

The new American Opportunity Credit reduces your tax bill up to $2,500 for each qualifying student for the first four years of college as long as you pay at least $4,000 in tuition and qualified college expenses.

The tax credit is deducted from the amount of tax owed, an important benefit that helps families struggling to pay for college.

The expanded credit now features higher income limits. Now, single taxpayers earning up to $90,000 modified gross income and married, filing jointly taxpayers earning up to $180,000 modified gross income may qualify for the credit. The credit is phased out for those earning above those levels.

The Lifetime Learning Credit has also been expanded, allowing more taxpayers to qualify. Up to $2,000 Lifetime Learning Credit may be claimed for qualified education expenses with no limit on the number of years it may be claimed for each student.

Taxpayers may use only one of these credits for each eligible student per tax year. However, more than one benefit may be claimed in the same year for a different student's expenses.

Eligible students or families with an eligible dependent can take a Student Loan Interest Deduction of up to $2,500 to help reduce the amount of taxable income. .

New York State offers a tax credit or deduction, for undergraduate study, depending on certain qualifications.

Details about both Federal and State education tax benefits can be found at HESC.org.

About HESC: The New York State Higher Education Services Corporation is the State's student financial aid agency, providing more grant and scholarship awards to students than any other state in the nation. In 2008-09, HESC helped nearly 600,000 students achieve their dream of attending college by providing $4.6 billion in grants, scholarships and loan guarantees, including $813 million awarded through the Tuition Assistance Program (TAP) to more than 375,000 students. HESC also assists schools and students with advanced default prevention, financial literacy and counseling programs, and provides training and technical services to college financial aid administrators and high school counselors.

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